Taxing Tuesday: Be My Valentine, SALT Cap
Please never sunset, my one true public finance love!
I had a bad day, so I gotta lighten my mood — by revisiting one of my favorite things ever: THE SALT CAP!
No, not that type of salt cap(ping). (That’s Terutsuyoshi w/ the big throw, and my fave, Ura, with the one grain of salt.)
I refer to, of course, the State and Local Tax cap on deductibility from federal income tax that came in with the 2017 Tax Cuts & Jobs Act (aka the Trump Tax Cuts). The current cap is a level $10K, with no adjustments, but it will sunset in 2025 unless Congress acts.
My preference is SALT cap at zero. This is not an option currently on the table, but I keep bringing it up.
My High Tax Area Reps Try, Try Again
I live in one of the highest-tax areas of the U.S., what with high property taxes and high state income taxes here in Westchester County in New York State. So yes, local area politicians are trying to repeal the SALT caps.
Roll Call: New ‘SALT’ caucus rejuvenates efforts to relieve deduction cap
A bipartisan group of House members relaunched a "SALT" caucus on Wednesday as lawmakers on both sides of the aisle prepare for another fight over scrapping a $10,000 limit on deducting state and local taxes.
The caucus is planning to meet and attempt to coalesce around specific policies to deliver constituents relief from the SALT cap, and to serve as the go-to unit for any negotiations to come.
“The first thing we’re gonna do is hopefully find legislation that we can all agree on to address this,” caucus co-chair Andrew Garbarino, R-N.Y., said at a news conference. “And two, hopefully we can all stand together to make sure that any proposed extension of this cap doesn’t happen. That is very important because people are already talking about it.”
….Reps. Mikie Sherrill, D-N.J., and Mike Lawler, R-N.Y., have a bill to lift the SALT cap to $100,000 for individuals and $200,000 for married couples filing taxes jointly through 2025, before it expires.
I find it amusing the other politicians have their names linked, but my representative, Mike Lawler, is not linked.
But I am a little confused — my earlier piece on Lawler’s proposal was that he would have $10K for singles and $20K for married couples. That might be a little easier to pass, as they have to (supposedly) replace any “lost” revenue with additional taxes, and SALT caps of $100K and $200K would be a little bit higher.
Well, it turns out to be a matter of timing. My earlier piece was in January, and the new announcement was February 9:
Rep. Mikie Sherrill, a Democrat from New Jersey and caucus vice-chair, is co-sponsoring a bill lifting the limit from $10,000 per household to $100,000 per single filer and $200,000 for married couples, she said in a statement.
It was not immediately clear whether the caucus would back this legislation. Lawler, of New York's 17th Congressional District, is co-sponsoring the bill.
Lawler recently expressed optimism for such a path in the new congress with bipartisan members of the heavily populated states of New York and California.
“We are a formidable voting bloc that can move or not move legislation,” he said. “For the purposes of getting something done on SALT, that is an avenue we may pursue.”
Okay, I’m still for a SALT cap of zero, but I know my ideological preference has no way of winning in my area.
That’s why Lawler is the elected politician here, and not me.
Republicans NOT in high-tax New York: Yeah, we’re keeping that SALT cap
So, here’s the deal with being in control of the House of Representatives — you start those revenue bills.
When it was Pelosi and the Democrats in charge, well, they had a fat chance of overturning the SALT cap for very amusing, ideological reasons.
On the Republican side:
Washington Examiner: House GOP looks to make Trump tax cuts permanent: Lower rates, child tax credit, SALT cap
House Republicans proposed legislation on Monday that would make permanent several expiring tax cuts enacted as part of the 2017 tax overhaul .
Rep. Vern Buchanan (R-FL) was joined by 72 of his colleagues in introducing the legislation.
Without Congress acting, nearly two dozen tax provisions that were part of the Tax Cuts and Jobs Act are set to sunset after 2025, affecting people and small businesses. Republicans have made extending portions of the tax law a top priority, although doing so will likely not happen in the near term as Democrats control both the Senate and the White House.
Among the provisions that will sunset are lower individual income tax rates and the ability for pass-through businesses to take a 20% deduction. Pass-through businesses, which are not subject to the corporate income tax, are the most common type of business and include sole proprietorships, partnerships, and S corporations — most small businesses.
Additionally, the $10,000 cap on deductions for state and local taxes paid is among the swath of policies set to expire. The cap was introduced as a pay-for by Republicans as the deductions largely benefit wealthy people in high-tax states. Several Democratic lawmakers have made raising or repealing the ceiling a top priority.
The main lesson is that this is going to be dependent on the 2024 elections - the Congressional AND Presidential elections.
With the 2017 TCJA I was a winner, in that I got a SALT cap and my taxes didn’t go up. (Well, my federal taxes went down very slightly.)
I can imagine a 2025 where I’m a multiple loser — SALT cap gone, but my taxes are up all over.
What’s the benefit of having no SALT cap if I have to pay more taxes after it’s all over? Huh?
Related Posts
Jan 2023: Taxing Tuesday: Let's Tax the Rich in NY! It Will Really Work This Time!
July 2019: Taxing Tuesday: SALT cap zero! Great new taste!
May 2020: MoneyPalooza Monstrosity! Looking at the SALT Cap Provisions
October 2019: Taxing Tuesday: Huzzah! Long Live the SALT cap!
October 2018: Taxing Tuesday: Don’t Blame the SALT Cap for the Pain of High Taxes, Also: The Quest for Trump’s Tax Returns in Tweets
August 2021: Taxing Tuesday: The SALT Cap Battle Continues
April 2021: SALT Cap Tussle: NY Democrats Have an Ultimatum
April 2022: Process is important: SALT cap and NY redistricting