Posted on Apr 15, 2021
Why some lawmakers are pushing to repeal limits on state and local tax deductions
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"Congressional lawmakers from both sides of the aisle are calling for a repeal of the state and local tax cap, arguing that they hurt middle-class Americans.
On Thursday, representatives led by Rep. Tom Suozzi, D-N.Y.; Rep. Andrew Garbarino, R-N.Y.; and Rep. Young Kim, R-Calif., announced a bipartisan caucus to overturn the so-called SALT cap."
On Thursday, representatives led by Rep. Tom Suozzi, D-N.Y.; Rep. Andrew Garbarino, R-N.Y.; and Rep. Young Kim, R-Calif., announced a bipartisan caucus to overturn the so-called SALT cap."
Why some lawmakers are pushing to repeal limits on state and local tax deductions
Posted from cnbc.com
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Posted 3 y ago
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LTC Eugene Chu anything that puts $$$ back in the pockets of the middle and/or lower income taxpayers is a good thing.
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SFC Casey O'Mally
Not if it takes that money to PUT into those pockets from LOWER income tax payers.
What the SALT exclusions do is allow folks in high income tax states to deduct their state and local taxes from their federal taxes. In essence, the federal government (i.e. all of the taxpayers from low income tax states) is paying the state and local taxes for the high income tax states.
SALT CAPS limit the amount that folks are able to claim - meaning the HIGH INCOME folks can't claim everything. Removing the SALT caps doesn't help lower income folks - they are already under the SALT caps. In the middle class, it helps only the HIGHER END - and then only marginally. The people who REALLY benefit? Folks who pay a LARGE amount of State and Local taxes - i.e. those who make a lot of money to be taxed.
Additionally, what SALT exclusions did, prior to them being capped, was allow states and cities to charge high tax rates with little push back. If I can offset a large portion of what I am paying to the city and the state - which is money that stays close to home instead of going off to somewhere I don't live - then I have less reason to complain about stupidly high local and state tax rates. But if all of a sudden, I have to pay my stupid high SALT taxes AND shoulder my fair share of the federal tax, instead of sticking the bill to low tax states. Well, now I have a reason to be upset at how high by state and local taxes are.
Which is why the folks you see wanting to get rid of SALT caps are from... you guessed it! New York and California!!! Two of the highest taxed states in the country.
What the SALT exclusions do is allow folks in high income tax states to deduct their state and local taxes from their federal taxes. In essence, the federal government (i.e. all of the taxpayers from low income tax states) is paying the state and local taxes for the high income tax states.
SALT CAPS limit the amount that folks are able to claim - meaning the HIGH INCOME folks can't claim everything. Removing the SALT caps doesn't help lower income folks - they are already under the SALT caps. In the middle class, it helps only the HIGHER END - and then only marginally. The people who REALLY benefit? Folks who pay a LARGE amount of State and Local taxes - i.e. those who make a lot of money to be taxed.
Additionally, what SALT exclusions did, prior to them being capped, was allow states and cities to charge high tax rates with little push back. If I can offset a large portion of what I am paying to the city and the state - which is money that stays close to home instead of going off to somewhere I don't live - then I have less reason to complain about stupidly high local and state tax rates. But if all of a sudden, I have to pay my stupid high SALT taxes AND shoulder my fair share of the federal tax, instead of sticking the bill to low tax states. Well, now I have a reason to be upset at how high by state and local taxes are.
Which is why the folks you see wanting to get rid of SALT caps are from... you guessed it! New York and California!!! Two of the highest taxed states in the country.
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They are correct in that action. It will quicken the demise of the middle class if not repealed.
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SFC Casey O'Mally
A1C Mike Allen - SALT Caps do not hurt the middle class much. And they don't hurt the lower class at all. They hurt exactly two groups of people: Rich folks and politicians in high-tax states.
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