Tag: SALT cap

Relief from SALT cap for Illinois pass-through businesses may be on the way – Wirepoints

Mary Pat Campbell
Relief from SALT cap for Illinois pass-through businesses may be on the way – Wirepoints

Excerpt:

It’s Senate Bill 2531. The bill is sponsored by Sen. Win Stoller (R-Germantown Hills) and it has picked up additional sponsors from both parties. It would allow a small business to elect to be taxed at the entity level, instead of letting the income pass through to their personal return. The owner would then claim an offsetting credit on their state return. It passed the Senate Revenue Committee with a vote of 9-0 and now goes to the Senate floor for further consideration.

We hope and expect the bill will become law. While we support the $10,000 federal SALT cap, it’s entirely appropriate for Illinois to facilitate exceptions recognized by the IRS, just as other states are doing. At least fourteen other states have passed or are in the process of passing similar legislation. The legislation could help up to 400,000 Illinois small business owners save thousands of dollars annually on their federal tax filings, according to Stoller.

Author(s): Mark Glennon, Ted Dabrowski

Publication Date: 17 April 2021

Publication Site: Wirepoints

SALT Cap Tussle: NY Democrats Have an Ultimatum

Mary Pat Campbell

Link: https://marypatcampbell.substack.com/p/salt-cap-tussle-ny-democrats-have

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Excerpt:

It’s not just a matter of the state/local tax levels for each state, but also what income levels are like for the state.

In any case, the pattern of which states’ taxpayers get the biggest boost from SALT deductibility might surprise you a little, such as with Utah and Georgia. But many aren’t surprising at all, such as New York and New Jersey.

But even without considering the geographical footprint, obviously high-income folks get the biggest boost from removing the SALT cap. This has been known since the TCJA back in 2017 when they imposed the cap to begin with. It’s partly why it was done.

Author(s): Mary Pat Campbell

Publication Date: 15 April 2021

Publication Site: STUMP at substack

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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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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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

Leave the Cap on the SALT

Mary Pat Campbell

Link: https://www.nationalreview.com/2021/04/leave-cap-salt/?utm_source=Sailthru&utm_medium=email&utm_campaign=TUE_20210406&utm_term=Tuesday-Smart

Excerpt:

Since the Republican tax reform of 2017, the federal government has allowed taxpayers to deduct $10,000 of their state and local tax payments from their federal taxes. What the Democrats now seek is a restoration of the unlimited tax deduction that had previously been in place. Only the highest earners hit that cap, so getting rid of it would directly benefit only them. The Tax Foundation estimates that lifting the cap would raise the after-tax incomes of the bottom-earning 40 percent of households by nothing. People in the middle of the income distribution would see an average increase of 0.01 percent. People in the top 1 percent, on the other hand, would receive a 2.8 percent increase. Another analysis, from the Tax Policy Center, found that the top 20 percent of taxpayers would receive 96 percent of the benefit of repealing the cap.

Publication Date: 6 April 2021

Publication Site: National Review

Corporate Dems Show Progressives How To Play Hardball

Mary Pat Campbell

Link: https://www.dailyposter.com/p/corporate-dems-show-progressives

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As The Daily Poster reported back in January, congressional Democrats in states like New York and New Jersey have been pushing for a repeal of the SALT deduction caps. Biden declined to include the SALT cap repeal in the American Rescue Plan. 

If the SALT cap was fully repealed, nearly all — 96 percent — of the tax benefits would flow to the top quintile of earners, and more than half of the benefits would go to the top 1 percent of earners, according to data from the Brookings Institution. Congress’s Joint Committee on Taxation found that the majority of the benefits of a SALT cap repeal would flow to households earning more than $1 million.

Author(s): David Sirota, Andrew Perez

Publication Date: 31 March 2021

Publication Site: The Daily Poster

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

Memo to Dems: Don’t Lift SALT Cap to Help the Rich, Help States Directly Instead

Mary Pat Campbell

Link: https://www.realclearpolicy.com/articles/2021/03/01/memo_to_dems_dont_lift_salt_cap_to_help_the_rich_help_states_directly_instead_685729.html

Excerpt:

But at a national level, it is much less clear that the SALT deduction makes for good politics. Most of the key swing states, including Georgia, Pennsylvania, North Carolina, New Hampshire, and Arizona were below the national average in the value of the SALT deduction as a percent of adjusted gross income before the new cap. Florida and Nevada were in the bottom seven states.  

Of course, states and local governments do need help from the Federal government. In fact, more help is needed now more than ever. The pandemic is hurting state and local government revenues, to the tune of around $350 billion over the next three years. Now is the time to enact a better federal support system for states and localities, and to replace the SALT deduction, rather than revert to the previous system. 

The good news is that there are a number of good policy options available to legislators, many of which were outlined at a recent Brookings event on this subject, and any of which would be much fairer and more effective than lifting the SALT deduction cap. The key point is that Congress should help states directly, rather than through the long, roundabout route of a regressive tax break to individuals.  

Author(s): Richard V. Reeves, Christopher Pulliam

Publication Date: 1 March 2021

Publication Site: Real Clear Policy

Big Tax Cut For The Rich Sought By Illinois Progressives In Congress – Quicktake

Mary Pat Campbell
Big Tax Cut For The Rich Sought By Illinois Progressives In Congress – Quicktake

Excerpt:

Illinois Senators Dick Durbin and Tammy Duckworth, as well as Illinois Rep. Brad Schneider, are leading the charge to repeal the cap on state and local tax deductions, as reported by Crain’s and elswehere. They’ve each sponsored bills to eliminate the SALT cap, as it is called, which became law in 2017.

That cap of $10,000 on deductibility of state and local taxes, including property taxes, walloped many high income taxpayers not just by increasing their federal tax bill but by reducing the value of homes they own. We described the research showing that in our recent article here.

There’s actually no debate about it: Liberal and conservative tax experts alike agree that the eliminating the SALT cap would be a windfall for high earners. 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:

Author(s): Mark Glennon

Publication Date: 2 February 2021

Publication Site: Wirepoints