Tag: federal income tax

Dem tax rift: Sanders rips Pelosi, Schumer for backing repeal of SALT cap

Mary Pat Campbell

Link: https://nypost.com/2021/05/10/sanders-rips-pelosi-schumer-for-backing-repeal-of-salt-cap/

Excerpt:

​Sen. Bernie Sanders is taking on the leaders of his own Democratic Party — Senate Majority Leader Chuck Schumer and House Speaker Nancy Pelosi — for supporting a repeal of the cap on deductions for state and local tax on federal income taxes.

Pelosi (D-Calif.) and Schumer (D-NY) — who represent two of the highest tax states — back repealing the $10,000 cap instituted by former President Donald Trump on SALT deductions, which Sanders said “sends a terrible, terrible message” to working-class people.

…..

“We could reverse that for 2018 and 2019 so that people could refile their taxes” and get a refund, Pelosi told The Times in March. “They’d have more disposable income, which is the lifeblood of our economy, a consumer economy that we are.”

Author(s): Mark Moore

Publication Date: 10 May 2021

Publication Site: NY Post

Relaxing State and Local Tax Deduction Cap Would Make Tax Code Less Progressive

Mary Pat Campbell
Relaxing State and Local Tax Deduction Cap Would Make Tax Code Less Progressive

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Excerpt:

All three options would primarily benefit higher-earning tax filers, with repeal of the SALT cap increasing the after-tax income of the top 1 percent by about 2.8 percent; the bottom 80 percent would see minimal benefit.

Removing the marriage penalty and raising the SALT cap would also mostly benefit higher earners, though after-tax incomes of filers in the 95th to 99th income percentiles would rise the most. For example, raising the SALT cap to $15,000 single and $30,000 joint would result in a 0.8 percent increase in after-tax income for the 95th to 99th income percentiles and a 0.4 percent increase for the top 1 percent.

The top 1 percent benefits less because the SALT cap remains in place, so there is less of a benefit as a portion of their incomes when slightly increasing the cap. For example, a joint filer with $5 million in after-tax income could receive an additional $7,400 in reduced tax liability ($20,000 in increased SALT deductions times the 37 percent top individual income tax rate), which is a 0.1 percent increase in after-tax income.

Author(s): Garrett Watson

Publication Date: 3 May 2021

Publication Site: Tax Foundation

The Heroic Congressional Fight to Save the Rich

Mary Pat Campbell

Link: https://taibbi.substack.com/p/the-heroic-congressional-fight-to

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Excerpt:

However, the SALT cap didn’t so much go after “Democrats” as “affluent Democrats.” It only applied to people who itemize their taxes, which meant the 90% of Americans who take the standard deduction were unaffected. The deduction raised over $70 billion in just the first year, and roughly 56% of that money came just from the top 1% of taxpayers, living in a few states in particular.

The tax nastygram seemed directed at Trump’s hometown delegation. Congresswoman Carolyn Maloney in April of 2017 complained about the cost of protecting “Trump and his family here in NYC”; the SALT cap affected 19% of Maloney’s constituents in Brooklyn and on the Upper East Side, and taxpayers in that 19% each lost an average of $100,405 in breaks. Chuck Schumer, one of Trump’s fiercest critics, personally took over $58,000 in SALT deductions just in 2016.

Overall, 39 of the 40 districts most affected by the SALT cap were represented by Democrats. Of those, 28 came from New York, New Jersey, and Connecticut. Also affected: Nancy Pelosi’s San Francisco district, where residents lost an average of $53,471 of write-offs. Trump’s campaign promises to take on “elites” proved phony, except when he was able to effect this targeted partisan strike at the people he knew and hated the most: rich, socially liberal Democrats, especially ones from the tri-state area.

Author(s): Matt Taibbi

Publication Date: 23 April 2021

Publication Site: TK News at substack

Pressure Intensifies On Biden To Restore A Tax Break Weakened By Trump

Mary Pat Campbell

Link: https://www.forbes.com/sites/lizfarmer/2021/04/21/pressure-intensifies-on-biden-to-restore-a-tax-break-weakened-by-trump/

Excerpt:

Mayors in blue states are lining up with Democrats in Congress to pressure the White House into restoring a tax break that was significantly reduced by former President Trump’s tax reform.

On Wednesday, Rep. Thomas Suozzi (N.Y.) joined officials from Albany; Columbia, S.C.; Philadelphia and San Diego to call for a repeal of the rule that limits state and local tax (SALT) deductions. They are calling for President Biden’s $3 trillion infrastructure proposal to include the repeal.

“No SALT, no deal,” Suozzi said on a conference call hosted by the U.S. Conference of Mayors.

Author(s): Liz Farmer

Publication Date: 21 April 2021

Publication Site: Forbes

Why should state and local taxes be deductible at all?

Mary Pat Campbell
Why should state and local taxes be deductible at all?

Excerpt:

SALT does create distortions of its own, however. SALT was the largest itemized deduction, allowing itemizers to export a portion of their burdens onto Americans elsewhere through the federal tax code. And it is substantial. If I faced a 30% federal marginal tax rate, paying $100 more in SALT lowers my federal tax bill by $30. It only costs me $70. Further, because that subsidy rises, the more property is owned and the higher the income, the distortion overwhelmingly favors the richest, with the middle-class (who own less property, earn less, and face lower marginal tax rates) getting far smaller benefits and non-itemizers getting no subsidy at all.

If citizens do not get their money’s worth from SALT spending, federal deductibility allows state and local governments to export some of the burdens of their waste and inefficiency to others, increasing their incentives for such inefficiency. That is, state governments are subsidized. No wonder Democrat politicians in high budget-high tax states are so strident in their support.

In the example above, federal income tax deductibility means that so long as local citizens get more than 70 cents of value per dollar of spending, and they don’t recognize the added federal burdens they must bear from those similarly subsidized elsewhere, they think they gain.

That encourages those governments to do more of what they should not and what they do badly, not more of what their citizens want them to do.

Author(s): Gary Galles

Publication Date: 19 April 2021

Publication Site: Orange County Register

Cuomo: Congress must include SALT cap repeal in future legislation

Mary Pat Campbell

Link: https://thehill.com/policy/finance/549083-cuomo-congress-must-include-salt-cap-repeal-in-future-legislation

Excerpt:

New York Gov. Andrew Cuomo (D) on Monday urged Congress to include repeal of the state and local tax (SALT) deduction cap in future legislation as House Democrats from the state are pushing to include such a repeal in an infrastructure package.

“Don’t pass another bill until you fully repeal SALT,” Cuomo said during a news conference.

Cuomo’s remarks came as he signed a state budget that raises state taxes for wealthy individuals and lowers taxes for the middle class.

The legislation Cuomo signed Monday raises the top state tax income rate to 10.9 percent for income above $25 million. It also continues phasing in tax cuts for middle-class households that were first enacted in 2016 and provides an income tax credit for certain homeowners with income up to $250,000.

Author(s): Naomi Jagoda

Publication Date: 19 April 2021

Publication Site: The Hill

The SALT Subsidy

Mary Pat Campbell

Link: https://www.nationalreview.com/corner/the-salt-subsidy/

Excerpt:

“Taxed twice on the same income”: This is an argument sometimes brought out in favor of the state and local tax deduction, or SALT. But it doesn’t really hold water.

It’s not problematic for different taxes, funding different services, to use the same denominator. County and municipal governments often tax the same property, for instance, and local and state governments often impose sales taxes on the same transactions. In these cases, requiring one tax to be deducted before the other was calculated would just be silly, because legislators would simply increase the second tax’s rate enough to offset the loss, leaving everything back where it started.

With SALT, though, there’s no simple solution like that — federal tax rates apply across the entire nation, while state and local taxes vary from place to place. A federal deduction subsidizes places with high taxes by collecting less federal revenue from those places, while any overall rate increase will hit the whole country. Blue-state lawmakers like Nadler like SALT, and want to get rid of the cap on it, because they want that subsidy, not because it’s fair tax policy.

Author(s): Robert Verbruggen

Publication Date: 15 April 2021

Publication Site: National Review

Why some of the most liberal Democrats in Congress want to bring back a tax break for the rich

Mary Pat Campbell

Link: https://www.vox.com/policy-and-politics/2021/4/14/22375306/salt-tax-deduction-repeal

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Excerpt:

The debate over Democrats’ next move on infrastructure, which Biden has put forth as part of his American Jobs Plan, and whether and how to pay for it through taxes, is just getting started. Plenty of proposals are going to be on the table, including SALT. The White House has signaled some openness to it, but the matter is far from settled.

“If Democrats want to propose a way to eliminate SALT — which is not a revenue raiser, as you know; it would cost more money — and they want to propose a way to pay for it, and they want to put that forward, we’re happy to hear their ideas,” White House press secretary Jen Psaki said at a press briefing on April 1.

….

According to estimates from the Center on Budget and Policy Priorities, if the SALT cap — which is set to expire in 2025 — were to be repealed earlier, it would overwhelmingly benefit those at the higher end of the income scale — the ones who were hurt by the bill back in 2017. The CBPP estimates that more than half of the benefit would go to the top 1 percent, and over 80 percent would go to the top 5 percent, of earners.

Author(s): Emily Stewart

Publication Date: 14 April 2021

Publication Site: Vox

NY House Democrats demand repeal of SALT cap

Mary Pat Campbell

Link: https://thehill.com/policy/finance/548046-ny-house-democrats-demand-repeal-of-salt-cap

Excerpt:

House Democrats from New York on Tuesday escalated their push for the repeal of the cap on the state and local tax deduction, threatening to oppose future tax legislation that doesn’t fully undo the $10,000 limit.

“As members of the New York Congressional Delegation, we urge you to insist on full repeal of the limitation on the State and Local Tax (SALT) deduction passed by Congress in 2017 and signed into law by former President Trump,” the lawmakers wrote in a letter to House Speaker Nancy Pelosi (D-Calif.) and House Majority Leader Steny Hoyer (D-Md.). “This issue is so critical to our state and our constituents that we will reserve the right to oppose any tax legislation that does not include a full repeal of the SALT limitation.”

Every Democrat in New York’s House delegation signed the letter except Reps. Alexandria Ocasio-Cortez and Kathleen Rice.

Author(s): Naomi Jagoda

Publication Date: 13 April 2021

Publication Site: The Hill

Pritzker Lobbies For Huge Federal Tax Cut For The Rich With Dishonest Letter To Biden – Wirepoints

Mary Pat Campbell
Pritzker Lobbies For Huge Federal Tax Cut For The Rich With Dishonest Letter To Biden – Wirepoints

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Excerpt:

The SALT cap increased “taxes on hardworking families,” says the letter. That’s “untenable given the dire economic conditions caused by the pandemic.” It goes on to say, “In short, middle-class Americans are struggling under this federal tax burden, while corporations – which are still able to fully deduct SALT as business expenses – are profiting because of the same law. The negative impacts of the SALT cap on middle class families are particularly egregious when you consider that in the states most affected by this cap, the federal government already takes more in federal taxes than the states receive in federal support, effectively subsidizing federal payments to other states.”

Tax analysts on the right and the left have documented why that’s completely false. The cap on SALT deductions was a windfall for the middle class and hammered high income taxpayers. The conservative Tax Foundation explained why here, and the liberal Institute on Taxation and Economic Policy, ITEP, wrote this in an article opposing elimination of the cap:

ITEP estimated that this would cost more than $90 billion in a single year. We found that 62 percent of the benefits would go to the richest 1 percent and 86 percent would go to the richest 5 percent. There is no state where this is a primarily middle-class issue. In every state and the District of Columbia, more than half of the benefits would go to the richest 5 percent of taxpayers. In all but six states, more than half of the benefits would go to the richest 1 percent. 

Author(s): Mark Glennon

Publication Date: 5 April 2021

Publication Site: Wirepoints

New York business leaders push Biden, Schumer to ditch the cap on SALT deductions

Mary Pat Campbell

Link: https://www.cnbc.com/2021/03/29/new-york-business-leaders-push-biden-schumer-to-remove-cap-on-salt-deductions.html

Excerpt:

Leaders of the finance industry and other businesses in New York are pushing President Joe Biden and Senate Majority Leader Chuck Schumer to bring back the full state and local tax deduction.

Schumer, who is up for reelection in 2022, has heard from business leaders across New York on multiple calls in recent weeks. Some of these people have also held talks with advisors to Biden.

The so-called SALT deduction was capped at $10,000 by former President Donald Trump’s tax reform bill, which became law in late 2017.

Author(s): Brian Schwartz

Publication Date: 29 March 2021

Publication Site: CNBC