Many politicians in high-tax states want it, but that isn’t a good reason to bring back the unlimited state and local tax deduction.
Since the Tax Cut and Jobs Act of 2017 passed, the limit on state and local taxes one can deduct on the federal income tax returns is $10,000. While a couple of socialists, such as Vermont independent Sen. Bernie Sanders and New York Democratic Rep. Alexandria Ocasio-Cortez, don’t want it to return, Democratic leaders such as Senate Majority Leader Chuck Schumer of New York and House Speaker Nancy Pelosi of California are for it, and they’re not alone. Even members of “the Squad” such as Minnesota Democratic Rep. Ilhan Omar, Michigan Democratic Rep. Rashida Tlaib, and Massachusetts Democratic Rep. Ayanna Pressley have voted in the past to raise the SALT deduction cap to $20,000.
No matter how much Democrats and blue-state Republicans fight to try to make this change, however, it should not happen.
Last month, the Democratic governors of states such as Illinois, New York, New Jersey, California, Connecticut, Oregon, and Hawaii sent President Joe Biden a letter asking him to “relieve this immense financial burden and eliminate the SALT cap entirely.” They wrote, “This assault disproportionately targeted Democratic-run states, increasing taxes on hardworking families. This was unacceptable then and is simply untenable given the dire economic conditions caused by the pandemic.”
An assault on “hardworking families”? Perhaps it is to these politicians’ donors. However, it does not make sense to give the wealthy a federal tax break because of taxes they are paying at the local level. The problem here is high taxes at the state and local levels; the way to fix those taxes is by lowering them at the state and local levels. It’s not by giving millionaires a tax break worth $62 billion per year that runs up our federal deficit even more. Not to mention, it’s regressive. About half of the benefits go to the top 1% of income earners, and 80% go to the top 5%.
If residential property taxes are too high, then perhaps the town can try to expand its commercial base or look for bloat in its budget. And if state income taxes are too high, maybe the state needs to take a hard look at its budgets. My home state of Massachusetts funds things such as Marvin Hagler statues, social justice podcasts, and Italian cultural centers. Funding those things shouldn’t give rich Bay Staters living in Wellesley and Newton a break when it comes to funding the military.
When arguing for repealing the SALT deduction cap, New York Democratic Rep. Tom Suozzi also hinted at this being a local issue. Last month, he said,“The middle class in my district or in many of the districts here is very different than the middle class in other districts in the country. 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 seen as being upper-income.”
Sounds like Long Island, where these people choose to reside, is an expensive place to live. It also sounds like a good reason to address the high cost of living at the state and local levels. However, the federal government shouldn’t discriminate against people based on where they live in the country. Living in Nassau County shouldn’t give someone a lower federal income tax rate than living in rural West Virginia.
If Democrats and blue-state Republicans want a benefit for working families, they should look at a permanently enhanced child tax credit or a child allowance instead. It’s something that would likely have a lot of benefits that lifting the SALT cap can’t replicate, such as reducing childhood poverty, increasing the country’s ailing birth rate, reducing the number of abortions that occur, letting more mothers choose to stay home with the children, and benefiting working and middle-class people in every state.
Instead, these politicians seem to want to help yacht owners.
Tom Joyce (@TomJoyceSports) is a political reporter for New Boston Post in Massachusetts. He is also a freelance writer who has been published in USA Today, the Boston Globe, Newsday, ESPN, the Detroit Free Press, the Pittsburgh Post-Gazette, the Federalist, and a number of other outlets.
