Why some lawmakers are pushing to lift restrictions on state and local tax deductions
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Congressmen from both sides of the aisle are calling for the state and local tax ceiling to be lifted, arguing that it will hurt middle-class Americans.
On Thursday, representatives led by Rep. Tom Suozzi, DN.Y .; Rep. Andrew Garbarino, RN.Y .; and Rep. Young Kim, R-Calif., announced a bipartisan caucus to overturn the so-called SALT cap.
The new group is a sign of mounting pressure to lift the $ 10,000 limit on SALT deductions introduced in 2017 as part of former President Donald Trump’s tax burden. On Tuesday, a group of New York lawmakers sent a letter to House Speaker Nancy Pelosi. D-Calif. Reserves the right to oppose future tax laws that do not include the lifting of the SALT cap.
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New York business leaders have also sounded the alarm, urging President Joe Biden and Senate Majority Leader Chuck Schumer, DN.Y., to lift the cap. In January, Schumer and New York Democratic Senator Kirsten Gillibrand introduced their own laws to lift the limit.
Governor Andrew Cuomo, DN.Y., also recently said that lifting the SALT cap would offset tax increases in the latest state budget, raising personal income tax rates for New York millionaires to the highest in the nation.
“It is high time Congress reintroduced state and local tax withholding so we can get more dollars back into the pockets of so many families, especially as we recover from the pandemic,” said Rep. Josh Gottheimer, DN.J. a briefing on Thursday announcing the SALT bipartisan effort.
Who will be hit by the SALT cap
In 2017, the average SALT withdrawal in Gottheimer’s northern New Jersey district was more than $ 24,000. The upper limit set hurt families who received state and local tax deductions in excess of $ 10,000.
“Taxes for the families in my district that I represent have increased, not decreased,” said Gottheimer, adding that people and jobs have left the state.
Other representatives from states with high taxes and high costs of living, including New York and California, agreed with the sentiment. New York, New Jersey, Connecticut, California, and Maryland were the states where the SALT deduction benefited taxpayers most, according to the Tax Foundation.
Representatives of some of these states argue that the SALT ceiling affects middle-income families in the counties they represent.
“The middle class in my district or in many districts here is very different from the middle class in other districts in the country,” said Suozzi. “If you make $ 100,000, $ 120,000, or $ 150,000 in my district, that’s middle class – in other parts of the country that’s considered higher income.”
Most Americans would not benefit from the SALT cap being lifted
While the SALT cap is a key issue in some parts of the country, lifting most Americans would not help most Americans. Instead, those with the highest incomes would benefit the most.
The top 20% of earners would get more than 96% of the benefits of a SALT waiver, and the top 1% of all earners would get 57% of the benefits, according to the Tax Policy Center. The same analysis found that only 9% of American households would benefit from lifting the SALT cap.
It is high time Congress reintroduced state and local tax deductions so we can get more dollars back into the pockets of so many families, especially as we recover from the pandemic.
US Representative, New Jersey