Democrats have a growing tax problem with SALT

[Yo_Mama_Been_Loggin]

A growing number of House Democrats are threatening to withhold support from President Biden's $3 trillion infrastructure proposal over a tax provision affecting state and local taxes.

Democrats from high-tax blue states are insisting on the repeal of a rule that limits state and local tax (SALT) deductions to $10,000, which was enacted as part of the 2017 tax law signed by President Trump to help offset the cost of some of the tax cuts in the package.

Reps. Thomas Suozzi (N.Y.), Bill Pascrell (N.J.) and Josh Gottheimer (N.J.) on Tuesday issued a joint statement vowing to oppose any efforts to change the tax code unless the SALT deduction is restored.

The issue could prove to be a serious stumbling block for House Democrats, who can only afford three defections with their razor-thin majority and still pass legislation on their own without any GOP support.

https://www.msn.com/en-us/news/politics/democrats-have-a-growing-tax-problem-with-salt/ar-BB1f8gTY?li=BBnb7Kz

This should be addressed. Limits on SALT was the right's way of sticking it to the libs.

[Xipe Totec]

1. I thought SALT was the Strategic Arms Limitation Treaty. I'm getting old... nt

[Yo_Mama_Been_Loggin]

2. It was once upon a time.

And I'm old enough to remember that too.

[Ferrets are Cool]

3. +1

[Biophilic]

4. Thanks, guys. I was totally confused also. Now I've sort of caught up. nt

[crickets]

8. Same. It was a little startling at first. nt

[riversedge]

24. bingo. I thought the same when I first read the statement. geech!!

[spooky3]

5. It shouldn't be a stumbling block. Dems should change the proposal

to eliminate this cap. It’s a matter of fairness AND not jeopardizing the suburban swing voters who recently went blue. Not that this is the only thing they care about, but many see it as a Republican transfer of tax burden from the ultra wealthy to middle class people in blue cities.

[onetexan]

12. +1 -K&R

[riversedge]

25. makes sense.

[ZonkerHarris]

6. the SALT deduction must be restored. It is part of Trump's plan to punish certain blue states

It really screwed us the last two years
It must go and I don't know why Democrats are not united on this.

[russiamommy]

16. +1

It killed us. It wasn’t the real estate taxes that got us, it was the limit on state income taxes, combined with the real estate taxes, that killed us.

[Celerity]

7. WWJMD

[lostnfound]

9. This had such a gigantic impact

Living in Chicago in a high tax house for sake of kid’s school, house value dropped over $200,000 which was mostly attributable to this single issue.

How?
Property tax was $26,000 which used to be fully deductible.
The $10,000 cap made it not at all deductible, because state income tax eats the whole cap up.
$26,000 deductible expense is equivalent to $40,000 non deductible expense when federal and state taxes are considered.

An $800,000 mortgage at 2.5% =$3160 per month.
A $510,000 mortgage at 2.5% = $2000 per month. That difference can make up for $1160 per months 12 = $14,000.
For a prospective buyer to make up $14,000 per year in extra expense means that the property value has to be reduced by $290,000.
And supply and demand was also affected, so fewer buyers interested in houses.

I made a good living for a few years, by moving to a high cost city; wanted the kid to be safe and in a good high school while I was working all the time. But now am unemployed, retired early. I lost > $220,000 selling, plus $14,000*3 years in extra taxes = $262,000. Helluva hit to my retirement funds.
And none of this loss was deductible, because it was a primary residence.

[MichMan]

10. How can the average Chicago resident with a median income of 60k even relate ?

when they hear someone living in an 800k home, & paying more in annual taxes and mortgage than they could possibly earn, complain about a tax loophole being taken away?

[lostnfound]

13. They can't. But household income of 160K is sufficient to get a mortgage of 800K

If you have no other debt.

Call it a loophole if you like. It was a strategy used by the government to encourage home ownership. They’ve obviously abandoned it since the breaks given to landlords are far higher.
If I owned the house and rented it out to someone, and then sold it, I could have FULLY deducted the real estate taxes and FULLY deducted the loss on sale. “Screw you, homeowners!”

Bottom line, it was a massive sudden change for people living in above average houses in high-tax states. If they were wage earners, not investors, the consequence could be on the order of paying

I’m an engineer with 35 years experience in my field, and blessed, and I was near retirement. If I were a doctor maybe I’d deserve it. I don’t. But I made a life decision based on economics that went through a tectonic shift.

I regret it. But what did I used to do with my extra money? Paid for nursing for a relative. Helped a friend who had no medical insurance. Subsidized a relative who lost their job. Donated to democratic candidates. No man is an island.

Now? Not so much.

[MichMan]

11. 70 % of tax filers use the standard deduction

The substantial increase in the standard deduction helped the bottom 50% way more than they lost with the SALT cap of 10k.

[tritsofme]

14. The cap should go considerably higher, but not be lifted altogether.

I don’t claim to know where the proper cut off is, but at some point this tax break just becomes a giveaway to the mega wealthy.

[cinematicdiversions]

27. This seems like a good compromise.

It is like the forgiving student loans problem. We want to forgive burdensome student loans but if someone is already making six figures should we really give them a large handout on top of that?

[cinematicdiversions]

15. Giving Tax breaks to hedge fund managers, High level executives and rich Texans

Doesn't seem like the most pressing issue right now.

I am sorry you are having trouble making ends meet in your 750k house with your 160k salary. I will see if the folks in line at the food bank can chip in and send you a package.

[Yo_Mama_Been_Loggin]

17. In my state the median price of a house is over $500,000

Many long time owners who have houses appraised at $750,000 paid a fraction of that some 30 years ago. They still have to pay property taxes based on that value. They should be able to deduct that.

[cinematicdiversions]

18. I completely understand that

But you are almost literally advocating for tax breaks for millionaires. Some of these tax breaks are bigger than the median income of the city they live in. You are literally giving rich people a normal person's entire gross income as a bonus because they have a high income and an expensive house.

I don't understand why people can't see this is wrong.

[Yo_Mama_Been_Loggin]

20. No I'm not

Where the fuck do you get the idea I am? The millionaires still get their deductions under the current GOP tax system.

I am advocating for high taxed states which are usually Democratic to be able to deduct what they were before.

[cinematicdiversions]

26. Well when your paid off house is worth 750k

You are within spitting distance.

Look, I get it we all want the rich to pay. But not rich like us, the real rich. The problem is the money has to come from somewhere and wealthy people are a good source of tax dollars. And like it or not, if you are worried about tax deductions rather than the Child care credit you are probably wealthy.

While we have sizable poverty in the US we should not be giving tax breaks to people because they earn too much or live in a too nice area.

[Yo_Mama_Been_Loggin]

29. Too nice an area?

More like there are limited places in the Seattle area to build hence driving the price of homes up. The appraised value of my house is $300,000 FWIW.

Wealthy is a relative term sir. My net worth is about $1.5 million so I guess I'm wealthy in your eyes.

Guess what. The most I ever made in one year was $60,000. I basically saved a little every year and was able to retire early.

My net worth gives me financial security. It doesn't give me an ostentatious lifestyle

But I digress. The fact is I and many others in my state pay higher federal taxes thanks to the so-called tax reform.

[cinematicdiversions]

36. Yes you are wealthy.

There is nothing wrong with that I am somewhat wealthy too. Many people with a retirement savings in the S and P 500 and owning a home outside of Mi and Ohio probably found themselves wealthy this year. (My house went up another 50k while I was typing this)

Neither of us have an ostentatious lifestyle. I find people who lease Porche Minivans and go on Instagram vacations often don't have more than a few bucks in the bank. The Millionaire next door has never been more true.

My brother is a small business owner in Bellevue WA. I have heard about the taxes.

I don't have any easy answers. I just know we, as a country, have to take care of some serious issues. And we can't keep just printing money without collecting some. I just don't think cutting taxes for the, let's call them well off, is the right thing to do initially.

[cinematicdiversions]

22. Not only of course. Lots of paper millionaires as well.

Look I understand the issue. I sympathise with people living by choice in High-tax states. I don't understand why the poor in those states and across the country need to subsidize their good fortune.

We have hundreds of tent cities springing up all over it is obscene to give away tens of thousands of dollars to "poor people" in 800,000 dollar homes.

[NutmegYankee]

21. I got hit on SALT limit on a 1500 sqft $200,000 home.

Perhaps you need a hard lesson in how taxes in New England work.

[cinematicdiversions]

23. I lived in New England

I am very familiar with how they work. But guess what, we vote these guys in every year. They are our guys. Maybe Westport doesn't need a fleet of police boats or their high school can go more than three years without resurfacing the tennis courts. And perhaps then they can lower taxes a smidge.

You want the benefits of a High tax state with the personal responsibility of living in Arkanas. It shouldn't work that way.

[NutmegYankee]

28. Last I checked Arkansas was crying for aid for a little cold and snow.

So much for personal responsibility. It's hard to find hardier people than rural New England.

What I want is to end double taxation. I shouldn't on principal be taxed on money I paid a different level of government to provide services that Uncle Sam doesn't provide.

BTW, I live in a Blue Collar former mill town.

[cinematicdiversions]

30. I couldn't agree more about the people of rural New England.

I walked over a mile to my bus stop at six years old and the idea a parent would drive me was as alien as anything.

But there is the rub. Everyone in the country pays those taxes. Some areas of New England (And New York, New Jersey, Texas) seem to have municipal governments that simply don't provide good value for money. Should the Federal government subsidize that? And if they should do you think it should be a priority?

[NutmegYankee]

32. The federal government isn't subsidizing me.

It exempts most people nationwide from double taxation, and prior to 2017 exempted all. It mainly only does double taxation in blue states with high costs of living as an attack on the Northeast and West coasts. The wages are higher because the costs of living are higher. Fuel costs more, winters here are harsher, and we get spectacular winter storms from the nearby ocean. Towns have the equipment on hand to handle that brutal onslaught. Housing is higher because there is less of it. Much of the region is hilly uplands and not suitable for dense sprawling suburbs.

[kcr]

31. Everybody thinks the entire population of CT lives in Westport

When the reality is quite the opposite. It's maddening, isn't it?

[NutmegYankee]

33. Beyond annoying. My town is one of the 20 distressed communities in the state.

And even I got hit with the SALT punishment. But the propaganda from the fascists makes people think it only hurts wealthy people.

[Doremus]

35. It's a repuke thing. Get rid of it. Solved. nt