Republicans Return to the SALT Mines

Eight Members want to subsidize high taxes in Democratic states

WSJ editorial. Excerpts:

"The Joint Committee on Taxation estimates that the [$10,000] cap raises federal revenue by about $80 billion a year, which helped offset lower tax rates on businesses and individuals."

"“Congress screwed New Yorkers on SALT,” said Rep. Nick LaLota, one of the group’s leaders, in July."

"But how does the lack of a special favor “screw” New York? State tax rates are set in state capitals like Albany, and state politicians are free to cut those rates. The SALT deduction makes it easier to keep taxes high because the write-off shields residents from the pain of those punitive rates.

And since blue-state taxes are stacked on high earners, the deduction’s benefits flow in substantial part to the wealthiest taxpayers. A 2020 analysis by the Brookings Institution found that the top 1% of earners would claim 57% of the benefit from eliminating the SALT cap."

"Lifting SALT would increase political pressure to raise federal tax rates to make up for lost revenue."

"The Ways and Means plan . . .  includes a misguided boost to the standard deduction."

"The bonus would be smaller for taxpayers earning more than $400,000, tapering off completely around $480,000. Unlike cutting income-tax rates, this brief and limited rebate would offer little incentive for taxpayers to work or invest more. Limiting the standard deduction by income is also a bad tax precedent that Democrats will expand on."