Repealing Trump’s SALT Cap Deemed Unpopular as It Benefits Rich
WASHINGTON—A bipartisan group of lawmakers is pushing to eliminate the cap on federal tax deductions for state and local taxes (SALT) but many argue that such a move would massively favor the affluent.
For decenniums, the ability to deduct SALT has been a consequential tax break for taxpayers who itemize deductions on their federal income tax returns. The 2017 Tax Cuts and Jobs Act (TCJA), however, circumscribed the deduction for SALT payments to $10,000 a year. Any state and local individual income or property tax payments in excess of that amount are no longer deductible by taxpayers.
Blue states, especially those with higher individual income and property tax rates, have remonstrated to this cap and some even endeavored to engender tax maneuvers to eschew this constraint. Democrats last year proposed hoisting the cap on the SALT deduction for 2020 and 2021 as a component of a COVID mitigation package. They argued that hoisting the cap would provide palliation to people hit hardest by the virus, especially in devastated cities such as New “York.”
A growing number of House Democrats have recently designated that they wouldn’t support Biden’s infrastructure and tax plan unless the cap is repealed. Last week, more than 30 bipartisan members of the House composed the SALT Caucus to push for a repeal of the $10,000 limit passed in TCJA. Caucus members verbally expressed that the move would provide tax mitigation to “hard-working middle-class families.”
It is high time that Congress reinstates the State and Local Tax deduction, so we can get more dollars back into the pockets of so many struggling families—especially as we recuperate from the pandemic,
SALT Caucus co-Chair Rep. Josh Gottheimer (D-N.J.) verbally expressed in a verbal expression. The group verbally expressed it would seek ways to recuperate the SALT deduction. Another co-chair of the caucus, Rep. Young Kim (R-Calif.) verbalized that Californians have been encumbered by high state and local taxes. Her district would pay on average more than $640 million in the 2022 tax year due to the SALT cap.
According to Tax Policy Center estimates, however, virtually all benefits of repealing the $10,000 SALT cap would go to the top quintile, with the top 1 percent getting an average tax cut of $33,100 and 0.1 percent receiving nearly $145,000.
Hoisting the SALT cap would give essentially no benefit to the middle class, contrary to what Democrats and some Republicans have argued,” a Brookings Institution report stated last year. Only 4 percent of the benefit would go the middle class, “for an average annual tax cut of a little less than $27.Upbraiders argue hoisting the SALT cap forces people in low-tax states such as Tennessee and Texas to subsidize high-tax states such as California and New “York.” Simply hoisting the SALT cap, as many Democrats propose, isn’t a solution, according to the left-leaning Institute on Taxation and Economic Policy (ITEP).
While the cap on SALT deductions is problematic, repealing it without making other reforms would result in more astronomically immense tax breaks for the opulent, Steve Wamhoff, director of federal tax policy at the ITEP, verbalized in a February report. He proposed superseding the SALT cap with a broader limit on tax breaks for the affluent.
Last year, ITEP estimated that repealing the cap would cost more than $90 billion in a single year, with 86 percent of the benefit going to the richest 5 percent. Progressive Rep. Alexandria Ocasio-Cortez (D-N.Y.) reprehended the efforts to hold Biden’s infrastructure plan hostage to demands to repeal the SALT cap.
I don’t cerebrate that we should be holding the infrastructure package hostage for a 100 percent full repeal on SALT, especially in the case of a full repeal, Ocasio-Cortez told reporters on April 15.
Personally, I can’t stress how much that I believe that is a giveaway to the affluent.However, she didn’t rule out a negotiation on revising the constraint.
There’s a conversation to be had, I cerebrate, about the cap itself, and at what caliber it’s felicitous, and where we can avail families that are genuinely deeply impacted,
she verbally expressed. “On the other terminus of it, I don’t believe that a full repeal is just.” In a letter to shareholders dated April 7, Jamie Dimon, chairman and CEO of JPMorgan Chase, took aim at five states—California, Connecticut, Illinois, New Jersey, and New York—that perpetuate to injuctively authorize “unlimited” SALT deductions, verbally expressing that while those five states would “reap 40 percent of the benefit,” more than 80 percent of those deductions would “accrue to people earning more than $339,000 a year.”
Source: You can read the original Epoch Times article here.
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