Republicans Want to Eliminate the Middle Class State and Local Tax Deduction to Give the Wealthiest Few a Huge Tax Cut

NY Republican: “Politically And Economically, It Would Be Devastating”
CA Republican: Ending SALT Deduction Is “Double Taxation”
NJ Republican: Ending SALT Deduction Is “Patently Unfair”

“Everyone inthe United States benefits from SALT, but the SALT deduction is useddirectly by around 30% of all taxpayers. Currently, taxpayers are giventhe option of deducting real estate taxes as well as either income taxes orsales taxes paid to state and local governments. While the SALT deduction isused across all income levels, the actual amount of property versus incomeversus sales tax deducted by lower, middle, and upper income taxpayers providesinsight into how those taxpayers benefit. For example, while over 70% of SALTdeductions for tax units with an AGI of more than $200,000 are from incometaxes, over 60% of deductions from taxpayers with less than $50,000 in incomecome from property tax. This highlights how important the property taxdeduction is for middle class homeownership.” [GFOA, Accessed 10/23/17]

ELIMINATING SALT WOULD DISPROPORTIONATELY HURT MIDDLE-CLASS AMERICANS, WITH MORE THAN 70 PERCENT TAXPAYERS THAT EARN BETWEEN $100,00 AND $200,000 PER YEAR CLAIMING THE DEDUCTION

“[A]lmost 40% of taxpayers making between $50K to $75K per year and more than 70% of taxpayers earning from $100K to $200K per year and use the SALT deduction.”[GFOA, Accessed 10/23/17]

“[O]ver50% of the total amount of the SALT deduction goes to taxpayers making lessthan $200,000 a year. In fact, every single taxpayer with income abovethe standard deduction amount could potentially benefit from deducting SALT. Whenlooking at the total amount deducted by income bracket, it is clear that theSALT deduction benefits taxpayers across all brackets. In fact, thebracket with the most filers and the largest total amount deducted is fromthose earning between $100,000 and $200,000 per year in AGI. With astandard deduction of $6,350 per individual and $12,700 for married couplesfiling jointly, even if Congress were to offset impacts from eliminating theSALT deduction through increases in the standard deduction, the deduction wouldneed to increase significantly. Even if it were to double or triple, asignificant portion of taxpayers would still end up with tax increases.”[GFOA, Accessed 10/23/17]

WHY WOULD REPUBLICANS END THIS MIDDLE CLASS TAX DEDUCTION? TO GIVE A HUGE TAX CUT TO THE WEALTHIEST FEW

Tax PolicyCenter: “By 2027, the top1 percent would get 80 percent of the plan’s tax cuts while the share formiddle-income households would drop to about 5 percent. On average, taxes forthe top 1 percent would fall by more than $200,000 or 8.7 percent of theirafter-tax incomes. The top 0.1 percent would do even better. They’d get anaverage tax cut of more than $1 million, a 9.7 percent boost in their after-taxincomes.” [TaxVox, 9/29/17]

THAT’S WHYEVEN REPUBLICAN LAWMAKERS HAVE COME OUT AGAINST THE ELIMINATION AND CALLED THEPROPOSAL WHAT IT IS: “DEVASTATING” AND “EMINENTLY UNFAIR”

Rep. DanDonovan (R-NY), Rep. John Faso (R-NY), Rep. John Katko (R-NY), Rep. Peter King(R-NY), Rep. Elise Stefanik (R-NY), Rep. Claudia Tenney (R-NY), Rep. Lee Zeldin(R-NY): “Without the SALT deduction, taxpayers in all 50 states and in the District of Columbia would be doubly taxed - they would pay federal income taxes on the money they pay totheir state and local governments. Such a policy is eminently unfair, as the federal tax code has recognized for the past 103 years.” [Letter to Secretary Mnuchin, 6/23/17]

Rep. Rodney Frelinghuysen (R-NJ), Rep. Peter King (R-NY), Rep. Leonard Lance (R-NJ), Rep. Frank LoBiondo (R-NJ), Rep. Tom MacArthur (R-NJ), Rep. Chris Smith (R-NJ), and Rep. Claudia Tenney (R-NY): “We hope that you will reconsider this dramatic increase to the tax burden borne to families and homeowners in select high-cost states. As outlined above,our states are economic engines that deliver disproportionately more revenue to the federal government that they receive back, paying more for services delivered to the country at large. Faced with an already high tax burden and high cost of living, our communities cannot afford another increase to their taxes.” [Letter to Secretary Mnuchin, 6/19/17]

Rep. PeterKing (R-NY): “Politically and economically, it would be devastating,” … “Thededuction is essential for these people to get by.” [Fox Business, 10/23/17]

Rep. John Faso(R-NY): Taxreform is important in order to grow the economy and to create opportunities for families across New York and the nation. I remain opposed to eliminating the deductions for state and local taxes, as this would represent, in effect, double taxation on New York families.” [Albany Business Review,10/23/17]

Rep. TomMacArthur (R-NJ): “It’snot some choice of people in the Northeast, and to tax them on dollars they nolonger have, because they’ve paid it to their state and to their localcommunity, is patently unfair.” [The Atlantic, 10/2/17]

Rep. LeonardLance (R-NJ): “I believe it is critically important to continue the deductibility of state and local taxes.I believe that this is essential to continue this in the code,” said Rep.Leonard Lance (R-N.J.), who represents a swing district where Hillary Clinton narrowly defeated Donald Trump in 2016. “I am a ‘no’ ” on tax reform unless it preserves the deduction, Lance added. [The Hill, 10/4/17]

Rep. TomMcClintock (R-CA): “[D]oubletaxation. You’re taxed on the same income by both the federal government and the state government and the local government. That won’t do at all and I think that’s going to be one of the pieces of the proposal that’s going to be modified over time.” [San Francisco Chronicle, 5/6/17]