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house Bill H.R. 1142

Should the SALT Deduction Be Restored & Paid for By Raising the Top Income Tax Bracket?

Argument in favor

The state and local tax (SALT) deduction is an important source of tax relief for residents of high-tax states, such as New Jersey. The SALT deduction cap hurts the middle class in high-tax states, and should be restored to ensure that families living in high-tax states aren’t punished for where they live.

FredM's Opinion
···
10/12/2019
Restore a true progressive tax rate table. The trickle down tax policies started by Reagan and double downed on by Dubya and now Trump have only lead to huge budget deficits and the growth in income inequality.
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jimK's Opinion
···
10/13/2019
First of all, different areas collect taxes on their population in different ways. For example, I moved from a state that had higher state Income tax as well as a higher regional sales tax rate. I moved to another state with lower state taxes and no locally augmented sales tax rates thinking it would be better. So, I thought; I didn’t count on a county income tax assessment and car-value based licensure fee- which pretty much eliminated the difference. The point is that a one size-fits-all SALT caps cannot be fair because taxes are raised in different ways in different places: by a combination of income taxes, consumption taxes (sales taxes on store bought items, gasoline, rent surcharges etc), and personal property taxes- all of which is fairly difficult to sort out and fully account for. Also, some places have higher state and local taxes overall. So, simply based on fair and equal treatment of federal taxpayers, the SALT tax deduction credit cap is basically unfair. The best thing is to eliminate it altogether since the job of trying to make it adjustably equitable does not seem worth the effort. And yes, the federal tax rates on higher incomes should at least be restored at lest to what they were before the Republican roll-back on wealthiest taxes. The income gap between average earners and the wealthiest earners has grown rapidly due principally to the large reduction in wealthiest tax rates enacted by the Republicans and initially paid for by a trillion dollar increase in the deficit- and which will have to be paid for by increased taxes on the non-permanent tax rate cuts that everyone except the wealthiest (whose rate cuts were enacted to be permanent) will be required to pay.
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Dawn's Opinion
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10/12/2019
Restore a true progressive tax rate table. The trickle down tax policies started by Reagan and double downed on by Dubya and now Trump have only lead to huge budget deficits and the growth in income inequality.
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Argument opposed

The SALT deduction primarily benefits those who are upper middle class or better and isn’t a major factor for most middle class families, most of whom don’t itemize their tax returns (and therefore can’t claim the SALT deduction). Eliminating the SALT deduction cap increases the deficit to help the rich.

JTJ's Opinion
···
10/13/2019
Don’t look to the rest of the country to subsidize you, stop voting for democrats who are taxing the crap out of you. And stop blaming the rich, you are all brainwashed marxists.
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Caren's Opinion
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10/12/2019
No because it means the middle class will get saddled with this. Democrats want to financially devastate the American people.
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Sean's Opinion
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10/13/2019
No! Why punish someone for being rich? It’s not the governments job to tell us how much we’re limited to. You work hard, over come life challenges and hurdles and stick towards your goal you’ll be successful. This is unfair to those who tried. Stop with the excuses for those who didn’t. These places suffering from the change in SALT are the same liberal places that have gone to shit. Vote responsibly!
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What is House Bill H.R. 1142?

This bill — the Stop the Attack on Local Taxpayers (SALT) Act of 2019 — would fully restore the SALT deduction. It would also restore the top income tax rate to 39.6 percent, the rate at which upper income was taxed prior to passage of the Tax Cuts and Jobs Act (TCJA).

Impact

Taxpayers who previously claimed over $10,000 in SALT deductions; top individual income earners; and the IRS.

Cost of House Bill H.R. 1142

A CBO cost estimate is unavailable.

More Information

In-DepthRep. Bill Pascrell (D-NJ) introduced this bill to repeal the federal cap on state and local tax (SALT) deductions and the top individual income tax rate to 39.6 percent, the rate at which upper income was taxed prior to passage of the TCJA (under the TCJA, the maximum tax rate is 37 percent):

“The Trump tax scam law specifically targeted [New Jersey] by capping the State and Local Tax deduction. The vast majority of those claiming the deduction are middle-class households, especially in New Jersey, and the deduction helps local governments raise revenue for needed projects. In my district alone, 37 percent of taxpayers claim the deduction, to the tune of nearly $19,000 on average. That’s not small change.  So this tax season, many of my constituents are taking a hit on their tax bills. Everything from our housing market to our ability to finance infrastructure and public safety will be hurt. The bipartisan SALT Act of 2019 will restore tax fairness for New Jersey and will be my top priority this Congress.”

Sen. Bob Menendez (D-NJ), sponsor of the Senate version of this bill, adds:

“We’re just two weeks into the tax-filing season, and thousands of taxpayers across New Jersey are now fully realizing how bad the Trump Tax Law and it’s gutting of the property tax write-off is for them and their families. We know all too well that New Jersey is a high cost state, where families face high property tax bills and high cost of living.  Well, our bill is designed to provide some relief. Generally speaking, the more you pay in property and state taxes, the more relief you’ll get from our bill. Allowing property taxes to be fully deducted has been a bedrock principle of our tax code and is commonsense tax policy that rewards states that invest in things like education, public safety, infrastructure and economic opportunity for all.”

In early February 2019, President Trump said he was “open to talking about” SALT revisions. In a White House meeting with a small group of regional reporters, he said, “There are some people from New York who have been speaking to me about doing something about that, about changing things. I’d be open to talking about it.” However, he didn’t specify what changes he’d be open to.

Senate Finance Committee Chairman Chuck Grassley (R-IA) has made his opposition to raising the SALT cap clear. After President Trump made his comments on being “open to talking” about this issue, Sen. Grassley’s spokesman, Michael Zona, said, “The Senate Finance Committee won’t be revisiting the SALT deduction reforms made in the Tax Cuts and Jobs Act under Chairman Grassley’s leadership.” Zona added:

“It’s ironic that the same Democrats who criticized the Tax Cuts and Jobs Act for supposedly benefiting only the wealthy are now advocating for a change to the law that would primarily benefit the wealthy.”

Finally, Zona argued that instead of raising the SALT deduction at the federal level, states should instead lower their own taxes.

This bill has 45 bipartisan House cosponsors, including 44 Democrats and one Republican (Rep. Chris Smith, the New Jersey’s delegation’s only Republican congressman).  A Senate version has also been introduced, sponsored by Sen. Bob Menendez (D-NJ). It has 14 Democratic Senate cosponsors. Most of New Jersey’s Congressional delegation has signed on to support this bill in both the House and Senate. AFSCME, the National Association of Counties, and the US Conference of Mayors have sponsored this bill.


Of NoteThe Tax Cuts and Jobs Act capped the state and local tax deduction at $10,000 for individuals and $5,000 for married couples filing separately, in part because the standard deduction was doubled to $12,000 for individuals and $24,000 married couples with joint returns — meaning fewer taxpayers would need to itemize and claim the deduction. Prior to the enactment of this Republican tax law, taxpayers who itemized could deduct their state and local property and income taxes without limitation.

The state and local tax deduction can only be claimed by taxpayers who itemize their returns, so it generally benefits higher earning taxpayers. According to data from our partners at USAFacts, a non-partisan civic data initiative, the average tax savings from claiming the deduction per return in 2015 for taxpayers making less than $61,000 was $144; whereas taxpayers making more than $113,000 saved $1,569 on average and the top 1% of taxpayers saved an average of $21,723. In 2017, data from USAFacts put the total amount of taxes deducted using SALT at $104.1 billion.

Rep. Pascrell’s office disputes the assertion that the SALT deduction largely benefits the wealthy, saying that it in fact benefits middle-class families earning under $200,000:

“The SALT deduction allows taxpayers to write off taxes paid at the state and local level from their federal income tax bill so they won’t be subject to being taxed twice on the same dollar.  In addition to helping families avoid double taxation, the SALT deduction supports the ability of communities, cities, and states to raise their own revenues and fund critical investments in public education, infrastructure, social services, and public safety.”

To back up its assertion, Rep. Pascrell’s office cites a survey of over 300 New Jersey-based CPAs by the New Jersey Society of Certified Public Accountants (NJCPA), in which over 63 percent of respondents said their individual and family clients earning less than $200,000 would see their federal tax bill rise as a result of the SALT cap. In Rep. Pascrell’s home district, the average family pays $18,000 in annual property taxes — the full amount of which would have been deductible from their federal taxes prior to the TCJA’s passage.

However, the Urban-Brookings Tax Policy Center estimates that the top one percent of taxpayers would reap around 56 percent of the benefits if the SALT cap were to be repealed.

Analyzing this bill, the Tax Foundation found that repealing the SALT deduction cap and raising the top tax rate to 39.6 percent would reduce federal revenue by $532 billion over the next ten years. In the same analysis, the Tax Foundation also found that this proposal would “almost exclusively provide tax relief to the top 20 percent of income earners,” with the largest cut of savings going to the top one percent of earners.


Media:

Summary by Lorelei Yang & Eric Revell

(Photo Credit: iStockphoto.com / mphillips007)

AKA

SALT Act

Official Title

To amend the Internal Revenue Code of 1986 to repeal the dollar limitation on the deduction for State and local taxes and restore the 39.6 percent individual income tax rate bracket.

bill Progress


  • Not enacted
    The President has not signed this bill
  • The senate has not voted
  • The house has not voted
      house Committees
      Committee on Ways and Means
    IntroducedFebruary 11th, 2019
    Restore a true progressive tax rate table. The trickle down tax policies started by Reagan and double downed on by Dubya and now Trump have only lead to huge budget deficits and the growth in income inequality.
    Like (152)
    Follow
    Share
    Don’t look to the rest of the country to subsidize you, stop voting for democrats who are taxing the crap out of you. And stop blaming the rich, you are all brainwashed marxists.
    Like (38)
    Follow
    Share
    First of all, different areas collect taxes on their population in different ways. For example, I moved from a state that had higher state Income tax as well as a higher regional sales tax rate. I moved to another state with lower state taxes and no locally augmented sales tax rates thinking it would be better. So, I thought; I didn’t count on a county income tax assessment and car-value based licensure fee- which pretty much eliminated the difference. The point is that a one size-fits-all SALT caps cannot be fair because taxes are raised in different ways in different places: by a combination of income taxes, consumption taxes (sales taxes on store bought items, gasoline, rent surcharges etc), and personal property taxes- all of which is fairly difficult to sort out and fully account for. Also, some places have higher state and local taxes overall. So, simply based on fair and equal treatment of federal taxpayers, the SALT tax deduction credit cap is basically unfair. The best thing is to eliminate it altogether since the job of trying to make it adjustably equitable does not seem worth the effort. And yes, the federal tax rates on higher incomes should at least be restored at lest to what they were before the Republican roll-back on wealthiest taxes. The income gap between average earners and the wealthiest earners has grown rapidly due principally to the large reduction in wealthiest tax rates enacted by the Republicans and initially paid for by a trillion dollar increase in the deficit- and which will have to be paid for by increased taxes on the non-permanent tax rate cuts that everyone except the wealthiest (whose rate cuts were enacted to be permanent) will be required to pay.
    Like (73)
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    Restore a true progressive tax rate table. The trickle down tax policies started by Reagan and double downed on by Dubya and now Trump have only lead to huge budget deficits and the growth in income inequality.
    Like (45)
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    No because it means the middle class will get saddled with this. Democrats want to financially devastate the American people.
    Like (31)
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    Restore fair taxing and remove regressive tax brackets!
    Like (30)
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    The trickle down is a farce. Rich people getting richer. Poor people getting poorer. The middle class is being killed by his tax policy.The only thing that trickles down is 💩 because 💩 won’t run uphill. Tax the rich. They can afford it. Trump has created a Ponzi scheme.
    Like (24)
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    A middle class is a good thing.
    Like (23)
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    No! Why punish someone for being rich? It’s not the governments job to tell us how much we’re limited to. You work hard, over come life challenges and hurdles and stick towards your goal you’ll be successful. This is unfair to those who tried. Stop with the excuses for those who didn’t. These places suffering from the change in SALT are the same liberal places that have gone to shit. Vote responsibly!
    Like (21)
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    Terry the genius talks about “perks for the few.” The removal of the SALT tax is killing me. A hard-working middle class man about to hit 40. Meanwhile, the new tax code lets billionaires keep more billions. What a moronic statement to let the world see.
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    What they are really asking is: should wealthy Americans support the overspending of CA and NY? Even if they live in one of the 48 other states.
    Like (15)
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    It is time that those in the top tax bracket pay their share. Restore the SALT act.
    Like (15)
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    Those in the top income bracket certainly need to be charged at a higher rate than the gift that the GOP gifted them!
    Like (14)
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    Yes, it’s a start, but not far enough.
    Like (13)
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    SALT limit is finger in the eye to states that already send more $ to DC than they get.
    Like (13)
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    We need a tax structure that helps the most people. The top earners should pay more and passive wealth should be aggressively taxed.
    Like (12)
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    Without the SALT tax relief, living in a state with a high income tax (such as CA or NY or NJ) amounts to double taxation on some income. While a progressive tax is fine, a double income tax on the same income is criminal.
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    Yes, but there’s much more to improve as well as this. We need to tax the hell out of the rich to help the middle class. America is in deep debt, and the only places that the money should be coming from are taxes on the top 1% and cuts to the overblown military budget.
    Like (11)
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    There’s is no valid argument to requiring the federal government to essentially pay state taxes. SALT is simply a tool democrats use to hide their high local tax rate from voters.
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    Not only restore the SALT deduction, let’s repeal the Tax Cut and Jobs Act completely, going back to the pre-Trump tax system, while making changes to it - things like closing loopholes (primarily benefits the richest Americans), increasing the tax rate that of the top earners and instituting a better child tax credit (like the one we have today). It was obvious the current tax cuts are mostly benefiting the richest Americans. Let’s have a tax system that benefits everyone - that taxes higher earners at higher rates and lower earners at lower rates, yet provides the treasury with enough $ to run government programs (including so called ‘entitlement’ programs like social security, which are an entitlement because we paid into it).
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