Tag Archives: State and Local Tax Deduction

Keeping The SALT Limit Where It Is

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On Wednesday, Yahoo News posted an article about a bill to change the SALT deduction. The bill failed in the House of Representatives. The SALT deduction is the State and Local Tax deduction that President Trump capped at $10,000. High-tax states like New York, New Jersey, California, and Pennsylvania want the limit higher. That way when they charge their residents exorbitant tax rates, the residents can deduct those taxes on their federal income tax. In some high-tax states, just the real estate taxes on an average home are over $10,000. Generally, allowing higher SALT deductions is a gift to wealthy people and to people who live in high-tax states. In a sense, lower-tax states are funding the spending of the higher-tax states.

The article at Yahoo states:

A bill called the SALT Marriage Penalty Elimination Act, which would have raised the tax cap for some married filers and ease some of the burden in high-tax states like New York, was on the table in the House of Representatives. But it was rejected before it could even be formally considered.

“I’m hopeful this can be a moment of unity among my colleagues on both sides of the aisle,” said Rep. Mike Lawler (R.-N.Y.), the bill’s lead sponsor, as the debate got underway on Wednesday afternoon.

But — as was widely expected — it was not to be, with both Republicans and Democrats voting against the bill as it failed to garner agreement in a procedural vote.

The final vote on adopting a combined rule was rejected in a tally of 195-225, a defeat that is likely the end of the bill for the time being.

While I agree that all of our taxes should go down, limiting the SALT deduction was a way to hold high-tax states more accountable.

Slowly Moving Ahead

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The Independent Journal Review is reporting today that the U.S. House of Representatives has passed the Senate’s 2018 $4 trillion budget resolution, providing a boost to President Donald Trump’s push for tax reform.

The article reports:

While 20 Republicans opposed the bill, it narrowly passed with a 216-212 vote amid tensions over the budget’s impact on deficits and the debt.

The House endorsed the budget without changes after it passed in the Senate last week.

President Donald Trump promptly tweeted his excitement over the big next step on the way toward tax reform, a goal Republicans have been pushing to accomplish for years.

I am still looking for a list of people who voted for and against the budget. I am sure the list will be at Thomas.gov tomorrow.

The article lists some of the comments made by the Representatives:

However, some House Republicans voiced their reservations over the budget, with Rep. John Faso (N.Y.) stating he couldn’t support the bill due to the elimination of the SALT deduction.

“We must provide middle-class tax relief and lower the burdens on job-creating small businesses. I could not, however, vote in support of a budget resolution that singled out for elimination the ability of New York families to deduct state and local taxes,” Faso said.

House Ways and Means Committee Chairman Kevin Brady (R-Texas) called the bill’s passing a “legislative runway for pro-growth tax reform.”

“Our successful vote will allow us to move forward quickly on delivering the first overhaul of America‘s tax code in more than three decades,” Brady added.

Rep. John Yarmuth (D-Ky.) said the planned tax cuts “will not a create an economic boom, but will instead lead to a higher concentration of wealth among the rich, while dramatically increasing deficits and debt.”

I would like to make a comment on the elimination of the SALT (state and local taxes) deduction. Why in the world should fiscally responsible states be subsidizing fiscally irresponsible states? That is what the SALT deduction does. As for the Democrats’ constant cry of ‘tax cuts for the rich,’ the rich are the people who pay taxes, why shouldn’t they get a tax cut? As I have reported numerous times, the top 10 percent of income earners, those having an adjusted gross income over $138,031, pay about 70.6 percent of federal income taxes. About 1.7 million Americans, less than 1 percent of our population, pay 70.6 percent of federal income taxes. These numbers come from actual IRS data. If you are cutting taxes, it is logical that those people paying the taxes would be affected.

Let’s just cut everyone’s taxes and cut the size of government in Washington.