“I think it’s a cheaper route for the rich,” she told reporters last month. “Therefore, I do not believe in holding the hostage to completely cancel the entire infrastructure package and eliminate the cap. I think we can negotiate about the policy, but it’s a bit of an extreme situation, to be frank.
There is no debate that the SALT deduction goes mostly to wealthy taxpayers. According to an analysis, the richest 5 percent of the families get about 85 percent of its benefits. Institute on Taxation and Economic Policy In Washington. The cap was to be repealed, about two-thirds of the profit – about $ 67 billion – would go to households making more than $ 200,000 per year.
Exactly how it is distributed is subject to an overarching crosscrypt of tax policies, the effects of which vary from place to place. Since 2017 tax cuts Broadly reducedEven for residents of high-tax states, the $ 10,000 cap meant that blue states ended up with thriving ones Small tax deduction Compared to low-cost red states.
But the political bottom line is that a very visible benefit capping angered the types of voters that high-tax states rely on – families in a place like Long Island or Orange County, California. Which can make a six-figure income. Pay thousands in house and state income and local property taxes a year. In the psychology of paying taxes, the slightest savings may not be worth much at all compared to the savings, especially if you think the blue state taxpayers were in the clear.
Cheap or not, there is political logic in trying to restore unlimited profits. Thriving suburban voters helped Mr. Biden win the White House, and there is also some evidence to suggest that Angry at lost cuts Democrats flipped a handful of Republican seats during the 2018 election.
While this debate disproportionately affects Democratic districts, SALT tends to be less partisan than representing voters from wealthier areas with higher housing costs. The handful of Republicans who voted against the 2017 tax cuts mostly did so because of the loss of tax breaks, like SALT, and today Representative Young Kim supports California Republicans from Orange County, Cap revocation.
There is also no doubt that the cap falls very heavily on the blue states. Prior to the 2017 tax deduction, the average sales cut in New York was $ 22,169 – double the national average of $ 10,233 – according to The data Compiled by the Government Finance Officers Association. It was $ 19,664 in Connecticut, $ 18,437 in California and $ 17,850 in New Jersey.