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NCSL fires at proposed elimination of SALT deduction

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Illinois

* Press release…

The National Conference of State Legislatures (NCSL) issued the following statement in response to the release of the tax reform framework developed by the Trump administration, the House Committee on Ways and Means, and the Senate Committee on Finance:

As a central tenet of tax reform is to provide tax relief for the middle class, NCSL is dismayed that the released framework will eliminate a deduction that is vital to middle class taxpayers, the State and Local Tax (SALT) deduction. The SALT deduction has existed in the federal tax code since its inception, which coincidentally was also when the federal tax code was at its simplest, because federal tax writers were cognizant to not tax an individual’s income twice. Eliminating this deduction will lead to higher tax burdens for tens of millions of middle class taxpayers of every political affiliation, an outcome contrary to the stated goal of providing meaningful relief to taxpayers. The elimination of the SALT deduction also impedes the ability of states to invest in infrastructure, fund education, and provide the vital public services that Americans expect from their state and local governments.

Ensuring that the incomes of American workers are not taxed twice hardly counts as a special interest tax break or loophole that needs to be closed. NCSL strongly supports preservation of the SALT deduction and opposes any attempt to harm middle class taxpayers and their communities.

Protect state taxpayers. Protect local decision making. Protect SALT.

I don’t think I’ve ever seen NCSL take a hardcore public stance like that before.

“Blue” states tend to have higher state and local taxes, including property taxes, which is one reason why this is being floated in a Republican Congress. But there are a whole of of Republican members in high-tax suburban and rural districts that will be exposed to some serious constituent anger over this topic.

* From GOP Congressman Rodney Davis…

“Today House Republicans united around middle-class Americans who are being crushed by our outdated tax code,” said Davis. “Illinois residents know all too well the impact high taxes are having on their families’ ability to save and get ahead and our state’s ability to compete for good-paying jobs. Our plan uses Illinois as an example of what not to do. We want to cut tax rates for individuals, simplify but maintain important middle-class deductions, and make it so American businesses can compete globally. There’s still much more work to be done, but this is our shot at changing the lives of each working American for the better and I hope we get bipartisan support to get it done.”

But under this bill, those high state and local taxes won’t be deductible.

posted by Rich Miller
Wednesday, Sep 27, 17 @ 3:10 pm

Comments

Wow…this idea seems like a political death wish

Comment by Honeybear Wednesday, Sep 27, 17 @ 3:17 pm
Rodney will gladly follow Trump, Ryan, and McConnell off the cliff.

Comment by Precinct Captain Wednesday, Sep 27, 17 @ 3:19 pm
What’s the big deal here? Illinois *is* a low-tax state, is it not? And it’s just a few more dollars in taxes. Illinoisans love their taxes, after all. Right?

Comment by JB13 Wednesday, Sep 27, 17 @ 3:20 pm
The big state and local groups have been worried about this for a while. Even if it doesn’t affect many states, they tend to look out for each other on issues like this. (They have also gone to bat for states like Texas, which have no income tax, in order to allow Texans to deduct the amount of sales taxes they pay instead of income taxes.) Here’s a study that a bunch of them came together to produce earlier this year that outlines the potential consequences for state and local governments. http://www.usmayors.org/wp-content/uploads/2017/07/SALT-Final-Report.pdf

Comment by Dan Vock Wednesday, Sep 27, 17 @ 3:35 pm
Major tax overhauls are hard enough in an environment of civility and respect like the last one in 1986. Today with Trump and the polarization in Congress, it will be a miracle.

Comment by don the legend Wednesday, Sep 27, 17 @ 3:41 pm
One of the loudest arguments against the estate tax i.e. the “death” tax, is that it taxes the same income twice, once when earned and once when transferred. Isn’t there the same argument here? May be an interesting rhetorical role reversal.

Comment by Undiscovered country Wednesday, Sep 27, 17 @ 3:42 pm
Why do I suspect that the more we learn about the details of this plan, the more we’ll see how it favors corporations and the rich over everyone and everything else?

Oh, right. Its a Republican tax plan.

Comment by Northsider Wednesday, Sep 27, 17 @ 3:42 pm
Rodney is clueless. He wants to be liked by the big kids regardless of what is best for his constituents.

Comment by Iron Lady Wednesday, Sep 27, 17 @ 3:49 pm
Rodney and his party lie again about what their policy proposals do.

It never ends.

Comment by Blue Bayou Wednesday, Sep 27, 17 @ 3:57 pm
Can we get past the concept that only blue states will be hit with this? Look at the highest income tax brackets in places like Wisconsin, Iowa, Missouri, South Carolina, Arkansas, Louisiana and Georgia. These are hardly “blue” states.

Comment by Confused Wednesday, Sep 27, 17 @ 4:03 pm
but the standard deduction is increased very significantly, so the salt deduction should really only impact the weathliest, which is something the dems want..

Comment by ughh.. Wednesday, Sep 27, 17 @ 4:10 pm
Here’s hoping the GOP tax plan, having beem crafted in secret with no public hearings or bipartisan input, meets the same fate as their healthcare reform bills.

Comment by hisgirlfriday Wednesday, Sep 27, 17 @ 4:18 pm
===but the standard deduction is increased very significantly===

Nope. In the fine print, the standard deduction is only going to increase by about 12% for most people. At least in this draft.

So it’s not likely to offset the SALT deduction.

Comment by PJ Wednesday, Sep 27, 17 @ 4:38 pm
About half of Americans don’t owe federal income taxes. Consequently, they probably don’t get much benefit out of the SALT deduction. The biggest beneficiaries pay the most income and property taxes, which means they sure aren’t poor.

Comment by anon2 Wednesday, Sep 27, 17 @ 8:15 pm
The increase in the standard deduction is pure subterfuge, because the plan eliminates personal exemptions. Childless couples who do not itemize may benefit slightly, but if that couple has just one child, their combined standard deduction and personal exemptions will be lower.

Comment by Andy S. Wednesday, Sep 27, 17 @ 8:19 pm
If there is no higher deductible for seniors like there is now I will pay more. My senior deductible and personal exemption are slightly over $12000 now and bottom tax rate will go up. So much for helping lower and middle class persons.

Comment by Scared senior Wednesday, Sep 27, 17 @ 8:48 pm
–fine print– show me the fine print?

The tax brackets are: 0%, 12%, 25%, and 35% but I haven’t seen the income levels yet, has anyone else?

Comment by pundemonium Thursday, Sep 28, 17 @ 12:54 am
All the talk about the loss of SALT being compensated by doubling the standard deduction does not consider that for singles, the new standard deduction will only increase $6000. Losing the personal exemption - takes away $4000 of that - so single homeowners (middle class) are toast.

Comment by Frustrated Thursday, Sep 28, 17 @ 11:46 am