A bipartisan group of House lawmakers asked the Trump administration Monday to reconsider its support for ending the federal tax deduction for state and local tax deductions and warned that eliminating the break would result in even higher taxes for people in high-tax states.
"The elimination of this deduction unfairly penalizes residents in high-tax states like New York, California, Illinois, and New Jersey, where middle-class families can least afford another tax increase," 70 lawmakers told Treasury Secretary Steven Mnuchin in a letter sent Monday.
Mnuchin and the Trump White House have called for ending the deduction in order to raise revenues to offset reductions in tax rates. Getting rid of the break, one of the biggest in the tax code, would raise around $2 trillion over 10 years for the government, according to the Tax Foundation. Benefits from the break mostly accrue to high-income earners who itemize deductions.
Monday's letter was led by two New Jerseyans: Bill Pascrell, a Democrat, and Leonard Lance, a Republican. While most of the signatories were Democrats, the letter also included several blue-state Republicans. Tom MacArthur, Rodney Frelinghuysen, and Chris Smith of New Jersey signed, as did Peter King and Claudia Tenney of New York. While the authors expressed concern about losing the break, they stopped short of saying that they would oppose any bill that ended it.
In testimony to the Senate last week, Mnuchin said that he was getting "hammered" by members of the New York and California delegations for proposing to end the deduction.
Nevertheless, he also said in a different hearing that "we don't believe the federal government should be in the business of subsidizing states" by allowing a deduction for state and local taxes.
Past administrations, including Ronald Reagan's, have sought to limit the state and local tax deduction, only to drop it amid political backlash.