Republicans Consider a Worse Alternative to Capping SALT Deductions

JM Ashby
Written by JM Ashby

The proposal to eliminate state and local tax deductions as a means of paying for tax cuts for the rich was met with immediate opposition in Congress from Republicans who represent blue states. Those congressmen don't want to be caught raising taxes on their own constituents to fund tax cuts for someone else.

Last we heard, Republican leaders were considering a cap on the SALT deductions that would allow middle and lower class families making less than $400,000 per year to keep them, but that option may be off the table now.

According to Bloomberg, their latest idea is to eliminate the SALT deductions but preserve property tax deductions.

Current law allows individuals to deduct their state and local tax payments, and eliminating that break in full would raise an estimated $1.3 trillion over 10 years -- an amount Republicans need to offset the deep tax-rate cuts they’ve proposed. Retaining the ability to deduct property taxes would cost about $300 billion of that revenue. Individuals would lose the deduction on state and local income taxes.

My immediate reaction after reading this was that it's incredibly regressive.

The fact that it still wouldn't cover the cost of their tax cuts is another matter, but altering the tax code to favor property owners more than it already does would be regressive. This would be even more regressive than the alternatives.

A significant and growing number of Americans are renters and preserving property tax deductions won't do anything for them. I'm sure you could find some Republican who will say it could trickle down and reduce the cost of rent, but that's never been anything more than a fantasy.

With each of their ideas being worse than the last one, I don't know where that leaves the GOP. But as I've said many times already, I expect they'll pass strictly deficit-financed tax cuts because the pay-fors will be politically unpalatable.

  • Dread_Pirate_Mathius

    What a clusterfuck.

    And, when the shit hits the fan, it will all be blamed on Obama (and probably Hillary Clinton, too).