House narrowly passes bill that would restore SALT tax benefits to higher-income Americans
Source: Washington Post
House Democrats approved legislation on Thursday to repeal part of the 2017 Republican tax law but the effort may show just how difficult it will be to undo President Trumps landmark legislation.
Democrats only narrowly approved the bill, which would restore a tax break that had been sharply restricted by the 2017 Republican tax law. The bill, which passed 218-206, would allow Americans to offset more state and local payments from their income taxes.
The bill is expected to amount to little more than a messaging exercise, however. Senate Republicans have signaled they wont bring it to a vote, and the White House has also expressed opposition.
The 2017 tax law has continued to vex Democrats, who have said it primarily helps wealthy Americans and corporations. But analysts and tax experts say the bill House Democrats advanced on Thursday would primarily benefit affluent Americans. Thats because it would repeal a cap on state and local tax (SALT) deductions, a change that would benefit people with large tax bills.
Read more: https://www.washingtonpost.com/business/2019/12/19/house-narrowly-passes-bill-that-would-restore-salt-tax-benefits-higher-income-americans/?outputType=amp
4139
(1,893 posts)and republicans trying to keep the taxes
SWBTATTReg
(22,118 posts)farmers w/ high tax bills because of the size of their farms/ranches/livestock/etc., those families whose only significant tax write offs are the SALT amounts, etc. Not just the very affluent. Those too, who happen to fall into the cracks.
The Mouth
(3,150 posts)losing that deduction really hurt.
The plain fact is that most of the people I know make more money than they would elsewhere, but pay more to live here than they would elsewhere.
In some parts of the country, a $120K household living in a $700K house would be rich. Not in a lot of this state; the NUMBERS may be higher, but it balances out- more pay, more mortgage).
I can see someone in other places making the mistaken assumption that the above described household is 'rich', or 'upper middle class', but they would be wrong.
The Trump tax cuts were brilliantly designed to really hurt people in blue states; lose that SALT deduction and all of a sudden the higher tax<->higher social benefits equation starts to suck much more, putting much more pressure on the statehouse.
ripcord
(5,379 posts)States are welcome to charge whatever tax rate they like but they shouldn't expect the federal government to pick up part of that expense.
Zorro
(15,740 posts)You're essentially paying federal taxes on the difference between state taxes/mortgage interest and the limited $10k federal deduction.
The IRS doesn't tax you on SALT they have just reduced the cap on the amount you can deduct.
Zorro
(15,740 posts)MosheFeingold
(3,051 posts)And it's not (or shouldn't be) a partisan issue. Some of the concerns:
1. Giving people a federal tax break for state taxes is effectively a transfer of wealth from the poorer states to the richer states
2. Anyone hit by this is wealthy, whether they think they are or not
I also think it is anti-Democratic to give a tax break to higher-income people, regardless of where they live.
The Mouth
(3,150 posts)Utterly wrong.
Also, these are often the states that PAY a lot more in federal taxes than they get in federal services and benefits.
You really don't have the slightest idea of what you are speaking of.
aggiesal
(8,914 posts)that live in high priced areas in this country.
I live in San Diego County, where the median home price is $635,400
1.5% property tax on $635,400 is $9,531/Yr.
Currently we'd only be able to write off only $469 in State Income tax to reach our limit of $10,000.
dhol82
(9,353 posts)We have some heavy school and real estate taxes that pay for so much. To cap the amount has made property difficult to maintain.
The trump tax plan was devastating here.
PSPS
(13,595 posts)Example: Washington State is one of only a couple of states with no income tax at all. Instead, everything is financed through a sales tax (Boeing planes are exempt, of course.) As such, it is the most regressive form of taxation there is. Being able to deduct a portion of the sales taxes paid helped almost everyone in such a scenario.
In other states where there is usually a mix of both sales and income taxes, the effect is almost the same although the presence of the state income tax, which is graduated, dilutes the effect depending on the rate. Oregon, for example, has no sales tax and only a graduated income tax.
progree
(10,907 posts)Property taxes are a very regressive tax in that inarguably in the case of renters, its the renters who pay. And of course the homeowners. Otherwise I agree with u entirely.
Admittedly I speak from a Minnesota perspective that supposedly is a low property-tax state. Bullshit. And like I say, in a market economy, its ultimately the renters who pay in the case of rental property. Property taxes is a cost of business, like all other costs of business, are passed on to the renters or customers. That's the reality of the situation.
PSPS
(13,595 posts)progree
(10,907 posts)yaesu
(8,020 posts)like the impeachment. Nothing good will happen as long as fascists control 2/3rd of ameriKa. For me, I'm more concerned with the poor losing food stamps.
IronLionZion
(45,440 posts)that's why this is one of those times where Dems support a deduction more than GOP.