Trump tells House Republicans to find a ‘fair number’ on SALT

[crazed_hoosier2]

The SALT deduction cap is a catnip issue for me. I find it fascinating.

Capping the SALT deduction was a giant FU from the Republican designers of the TJCA sent to Dems and blue states in general. The cap applies to all taxpayers in all states, of course. But there are more taxpayers paying $10k+ in SALT in high-tax states than in low-tax states. And, not surprisingly, blue state politicians went apoplectic about it -- including most of the blue state Republicans. And they're the ones who are the subject of today's story. Trump will need their votes to extend the TCJA, so he's going to allow them to hike the cap.

The net effect of the cap is that it increases the tax disparities between high-tax states and low-tax states. Those disparities were already there, the SALT cap made them worse. And these states are already dealing with the headaches of higher-income people leaving for Florida and Texas.

When it comes to tax policy, we're used to hearing Democrats wail about Republicans cutting taxes for the rich. But many Dems want to get rid of the SALT cap altogether -- which would amount to.....a huge tax cut for the rich!

Per that linked Brookings piece, removing the cap altogether would amount to about $100B per year less tax revenues. Of that, a whopping 57% would redound to the top 1%. And 25% would redound to the top 0.1%.

So you have (mostly) Democrats pining for lower taxes for the rich and (mostly) Republicans pining for higher taxes on the rich....and I'd guess that it all has to do with pressures to bear at the state level -- which is fascinating.

 

[BadWakeboarder]

The SALT deduction cap is a catnip issue for me. I find it fascinating.

Capping the SALT deduction was a giant FU from the Republican designers of the TJCA sent to Dems and blue states in general. The cap applies to all taxpayers in all states, of course. But there are more taxpayers paying $10k+ in SALT in high-tax states than in low-tax states. And, not surprisingly, blue state politicians went apoplectic about it -- including most of the blue state Republicans. And they're the ones who are the subject of today's story. Trump will need their votes to extend the TCJA, so he's going to allow them to hike the cap.

The net effect of the cap is that it increases the tax disparities between high-tax states and low-tax states. Those disparities were already there, the SALT cap made them worse. And these states are already dealing with the headaches of higher-income people leaving for Florida and Texas.

When it comes to tax policy, we're used to hearing Democrats wail about Republicans cutting taxes for the rich. But many Dems want to get rid of the SALT cap altogether -- which would amount to.....a huge tax cut for the rich!

Per that linked Brookings piece, removing the cap altogether would amount to about $100B per year less tax revenues. Of that, a whopping 57% would redound to the top 1%. And 25% would redound to the top 0.1%.

So you have (mostly) Democrats pining for lower taxes for the rich and (mostly) Republicans pining for higher taxes on the rich....and I'd guess that it all has to do with pressures to bear at the state level -- which is fascinating.

The SALT cap offset most of whatever I gained from his caps. I pay a lot of property tax and I expect this get fixed.

 

[twenty02]

Who doesn't want free stuff? Elimination of SALT caps is free money for state coffers at the expense of the Federal govt. Of course every blue state politician, regardless of political stripe is going to advocate for free money from the Feds

 

[Digressions]

Who doesn't want free stuff? Elimination of SALT caps is free money for state coffers at the expense of the Federal govt. Of course every blue state politician, regardless of political stripe is going to advocate for free money from the Feds

Wasn't this also a result of the, "Mississippi: The Anus of America", argument? Where blue states were giving far more per capita to the fed's, while others were net takers? I haven't looked at the maps lately, so things may have changed.

 

[JamieDimonsBalls]

The SALT deduction cap is a catnip issue for me. I find it fascinating.

Capping the SALT deduction was a giant FU from the Republican designers of the TJCA sent to Dems and blue states in general. The cap applies to all taxpayers in all states, of course. But there are more taxpayers paying $10k+ in SALT in high-tax states than in low-tax states. And, not surprisingly, blue state politicians went apoplectic about it -- including most of the blue state Republicans. And they're the ones who are the subject of today's story. Trump will need their votes to extend the TCJA, so he's going to allow them to hike the cap.

The net effect of the cap is that it increases the tax disparities between high-tax states and low-tax states. Those disparities were already there, the SALT cap made them worse. And these states are already dealing with the headaches of higher-income people leaving for Florida and Texas.

When it comes to tax policy, we're used to hearing Democrats wail about Republicans cutting taxes for the rich. But many Dems want to get rid of the SALT cap altogether -- which would amount to.....a huge tax cut for the rich!

Per that linked Brookings piece, removing the cap altogether would amount to about $100B per year less tax revenues. Of that, a whopping 57% would redound to the top 1%. And 25% would redound to the top 0.1%.

So you have (mostly) Democrats pining for lower taxes for the rich and (mostly) Republicans pining for higher taxes on the rich....and I'd guess that it all has to do with pressures to bear at the state level -- which is fascinating.

Sounds like I may benefit from a lift. Therefore...

Now, can he fix the mortgage interest limitation?

 

[crazed_hoosier2]

The SALT cap offset most of whatever I gained from his caps. I pay a lot of property tax and I expect this get fixed.

They’re talking about indexing the annual cap to inflation.

But this probably won’t ameliorate the blue state governors much. There aren’t all that many dollars at stake on the low end of this - and that’s all that would be impacted by hiking the cap to, say, $15k or something like that.

The average per capita dollar value for the Top 0.1% of taxpayers (which constitutes 25% of the entire haul) is $145k. The average for the Top 1% is $33k.

The governors can’t be all that worried about exempting lower dollar taxpayers. That’s not where the money is - and that’s what has to give them heartburn.

 

[JamieDimonsBalls]

Wasn't this also a result of the, "Mississippi: The Anus of America", argument? Where blue states were giving far more per capita to the fed's, while others were net takers? I haven't looked at the maps lately, so things may have changed.

I haven't seen any figures beyond 2021, but per capita, VA, KY and AK were top 3. AL, MS and LA were top 10.

Source:

Federal Aid by State 2024

worldpopulationreview.com

 

[twenty02]

They’re talking about indexing the annual cap to inflation.

But this probably won’t ameliorate the blue state governors much. There aren’t all that many dollars at stake on the low end of this - and that’s all that would be impacted by hiking the cap to, say, $15k or something like that.

The average per capita dollar value for the Top 0.1% of taxpayers (which constitutes 25% of the entire haul) is $145k. The average for the Top 1% is $33k.

The governors can’t be all that worried about exempting lower dollar taxpayers. That’s not where the money is - and that’s what has to give them heartburn.

The SALT caucus in the GOP has a lot of leverage. The default position is that the deduction cap goes away entirely after this year, and we go back to pre - 2017 tax policy.

 

[JamieDimonsBalls]

The SALT caucus in the GOP has a lot of leverage. The default position is that the deduction cap goes away entirely after this year, and we go back to pre - 2017 tax policy.

 

[UncleMark]

What is the fiscal/policy justification for the SaLT deduction to begin with? And if it's justified, why cap it at all? I'd be inclined to do away with it altogether, along with any number of deductions or caps scattered throughout the tax code.

 

[crazed_hoosier2]

The SALT caucus in the GOP has a lot of leverage. The default position is that the deduction cap goes away entirely after this year, and we go back to pre - 2017 tax policy.

They do. But in a House Majority of just 3 seats, everybody has a lot of leverage.

And one of those 3 seats is Thomas Massie - who is basically the modern day Ron Paul.

 

[crazed_hoosier2]

What is the fiscal/policy justification for the SaLT deduction to begin with? And if it's justified, why cap it at all? I'd be inclined to do away with it altogether, along with any number of deductions or caps scattered throughout the tax code.

I've long favored a Steve Forbes style flat tax on any and all forms of income with nothing more than a significantly higher standard deduction.

So I'm with you on this. But I'd guess that the original rationale for SALT is that we shouldn't pay federal taxes on the dollars we simply had to pay out in state and local taxes. I don't know if I'd call that "justification." After all, what's the justification for anything in the tax code? It's all a matter of tradeoffs.

 

[Joe_Hoopsier]

I've long favored a Steve Forbes style flat tax on any and all forms of income with nothing more than a significantly higher standard deduction.

So I'm with you on this. But I'd guess that the original rationale for SALT is that we shouldn't pay federal taxes on the dollars we simply had to pay out in state and local taxes. I don't know if I'd call that "justification." After all, what's the justification for anything in the tax code? It's all a matter of tradeoffs.

Is there any question on double taxation on this topic? or is it all covered up within the system that it's not double taxation, since states take some and then the feds take some, and the state and the fed are not the same tax collector.
Gov elected hogs, ALWAYS eat at a full trough. They always use your money to grind their feed ! ALWAYS !!