Tag Archives: SALT deduction

Remember When The Democrat Party Represented ‘The Little People’?

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The days of the Democrat party representing the working American are long gone. A recent item in the Build Back Better Bill illustrates where the Democrat party’s priorities truly lie. The Epoch Times posted an article today about the tax cut for the rich included in the bill.

The article reports:

President Joe Biden repeatedly said he would raise taxes only on the rich to pay for his Build Back Better plan, but now he’s backing a tax break for millionaires and billionaires, contradicting his past promises.

While the White House calls it a “compromise” to move the president’s agenda forward, this is a big deal, according to critics, as Biden and Democrats will likely face a messaging problem heading into 2022 elections.

House Democrats on Nov. 19 passed Biden’s nearly $2 trillion social and climate spending plan. The bill, called the Build Back Better Act, contains a wide variety of tax provisions, including an increased federal deduction for state and local taxes, or SALT.

The plan allows taxpayers to deduct up to $80,000 of state and local taxes against their federal income taxes, a sharp increase from the current $10,000 cap. This means many among the rich would pay lower federal income taxes than they currently pay.

President Donald Trump’s 2017 Tax Cuts and Jobs Act limited individual’s deduction for SALT payments to $10,000 a year. This cap on deductions, the studies showed, has increased the tax bill for residents of high-tax states, especially those who earn more than $500,000.

Blue states with higher individual income and property tax rates, such as New York, New Jersey, and California, objected to the cap imposed under 2017 tax overhaul, saying that it’s unfair to their residents. Since the passage of tax reform, they’ve tried various tax maneuvers to avoid this limitation.

Critics on both sides of the aisle, however, have said for years that eliminating or raising the SALT deduction cap would be a handout to the rich.

Under the House plan, roughly a third of the tax benefits would go to the richest 1 percent and three-quarters would go to the richest 5 percent, according to an analysis by the left-leaning Institute on Taxation and Economic Policy.

Another analysis by the right-leaning Tax Foundation found that “the top 1 percent of earners would experience a 0.8 percent increase in after-tax income in 2022 due to a more generous SALT deduction.”

Pay attention, Democrats–you  have been hoodwinked by your own party. The Trump tax cuts actually helped those in the middle class. The Biden tax cuts are tax cuts for the rich. It’s a pretty safe bet that no one in the middle class in paying $80,000 in state and local taxes, although California may be looking for a way to make that happen.

Sad News For America

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The Epoch Times is reporting that yesterday the House of Representatives voted to pass a bipartisan $1.2 trillion infrastructure bill. Unfortunately, thirteen Republicans joined with Democrats to pass the bill. Oddly enough, six progressive Democrats—members of the “Squad”—voted against the measure. Evidently the squad has grown–there used to be only four members. Now Cori Bush, a Democrat from Missouri, and Jamaal Bowman, a Democrat from New York, have joined the group.

The article reports:

The final vote was 228-206, with 13 Republicans joining Democrats in support of the bill. The Republicans were Reps. John Katko (R-N.Y.), Andrew Garbarino (R-N.Y.), Nicole Malliotakis (R-N.Y.), Tom Reed (R-N.Y.), Jeff Van Drew (R-N.J.), Chris Smith (R-N.J.), Don Young (R-Alaska), Adam Kinzinger (R-Ill.), Fred Upon (R-Mich.), Don Bacon (R-Nebr.), Anthony Gonzalez (R-Ohio), Brian Fitzpatrick (R-Penn.), and David McKinley (R-W.Va.)

…House Speaker Nancy Pelosi (D-Calif.) had sought to hold votes on both bills on Friday but was forced to postpone the vote on the Build Back Better bill, after some moderate Democrats said they wanted a least 72 hours to review the text of the bill, and to review the Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) scores on the spending bill to understand the “true cost of the legislation.” They also wanted the Senate to confirm it would not make changes to the bill in the interim period.

The New York Post reports:

In an effort to get the entire Democratic caucus on board, the legislation was further amended on Thursday to change provisions pertaining to drug pricing and the state and local tax deduction (SALT) — a priority for members that represent high-tax states like New York and New Jersey. 

Under the latest version of the Build Back Better legislation, the SALT cap would increase from $10,000 to $80,00 through 2030 before returning to $10,000 in 2031.

Drug pricing language was also altered to provide an extra year before Medicare is permitted to negotiate prices on biologics once those drugs hit the market.

The bipartisan infrastructure measure — negotiated by a group of 22 bipartisan lawmakers led by Sinema and Rob Portman (R-Ohio) — includes $550 billion in new spending, with $110 billion set to be allocated toward roads, bridges and other projects; $65 billion toward broadband, $66 billion to be spent on passenger and freight rail, $55 billion for water infrastructure, $39.2 billion for public transit, $47.2 billion for resiliency purposes, $7.5 billion for electric vehicle infrastructure and $21 billion to address pollution. 

Note that of the $1.2 trillion spent, only $110 billion goes toward roads, bridges and other projects.

Make no mistake about it, the change in the SALT cap is a tax cut for the rich in Democrat states where taxes are high due to reckless spending. It will cut the amount of revenue coming into the treasury and reward the states that voted for Joe Biden. It causes states with lower taxes to essentially subsidize the higher tax states.

We all remember a reasonable infrastructure bill that was suggested during the Trump administration that Speaker Pelosi refused to pass because she didn’t want President Trump to get credit for it. Now we have a pork-laden bill that includes things that no rational person would call infrastructure. We need to elect people who will be fiscally responsible and put patriotism over party.

Looking At Actions Rather Than Words

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Most of us who live in middle class America are not overly concerned with the limit placed by the Trump administration on the state and local tax (SALT tax) deduction on our federal income tax. Generally that deduction impacts people who live in New York, New Jersey, Connecticut, Massachusetts, California and one or two other states. Generally speaking, the people who are impacted by the limitations placed on that deduction are among the high earners among us who own large homes and live in states with high real estate taxes. Limiting that deduction was a way to end the practice of fiscally responsible states subsidizing fiscally irresponsible states. Limiting that deduction should have jarred the states impacted into being more fiscally responsible. Not only did that no happen, the Democrat Congress wants to end that limit–thus providing a tax break for the rich–something they continuously accused President Trump of doing.

On Tuesday Steven Hayward posted an article at Power Line Blog about the move to end the limits on the SALT deduction.

The article notes:

If you need proof that Democrats are really on the side of the plutocracy, look no further than New York’s Democratic House members, who today wrote to Speaker Pelosi threatening to vote against any of (P)resident Biden’s tax increase proposals unless the bill includes full repeal of the state and local tax (SALT) deduction limitations that were part of Trump’s 2017 tax reform. The SALT limitation was the single most “progressive” tax increase on the rich in years, but chiefly in high tax states like California, Illinois, New York, and New Jersey.

Read the letter for yourself and enjoy the casuistry: We need SALT repeal, the New York Dems day, so that our taxpayers won’t be “double-taxed,” but of course their citizens only face this problem because those states impose those extra high taxes. And most of the benefit of the SALT deductions go to high income people—the very people Dems are always telling us should pay their “fair share,” which they never define in any concrete way. “Fair share” just means “more.” Well, Trump delivered that, so what’s the problem?

I also like how the letter, in paragraph three, admits that cutting taxes on the rich will help spur job growth. I thought liberals didn’t believe in supply-side tax cuts?

This is the letter:

I guess the Democrats really do like tax cuts for the rich.