SALT Cap Repeal Does Not Belong in Reconciliation
For Immediate Release
Though the recent draft tax legislation proposed by the Ways and Means Committee is silent on the issue of the $10,000 state and local tax (SALT) deduction cap, several Members of Congress have said the final bill will include SALT cap relief.
In a recent analysis, we showed that SALT cap repeal is an expensive, regressive, and poor overall tax policy. And contrary to claims from advocates, SALT cap relief will deliver almost no benefit to the middle class.
The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:
Talk about political spin not lining up with reality. SALT cap repeal is little more than an expensive tax cut for the very rich.
This is no middle-class tax cut. But if you are looking for an inefficient expensive giveaway to very high earners, SALT cap repeal may be for you.
SALT cap repeal would deliver an average benefit of over $150,000 per year to a household in the top 0.1 percent but closer to $15 for a household in the middle of the income spectrum. The middle class need not hold their breath; this policy won’t offer them any meaningful relief.
After spending the last four years complaining about Republican tax cuts for the rich, it is oddly hypocritical that Democrats would want to shepherd through their own huge tax cut for the rich.
- Over the next four years, SALT cap repeal would consume every dollar raisedfrom proposed increases to corporate and individual tax rates and redirect the money higher up the income ladder.
- For the annual cost of the SALT cap repeal, policymakers could enact the President’s plans to offer universal pre-K, free community college, paid family leave, affordable child care, and an Earned Income Tax Credit expansion. Not just one of these policies, but all of them together.
- SALT cap repeal would lose twice as much per year in revenue as all climate, infrastructure, and housing-related tax breaks proposed by the House.
- 90 percent of the benefits of SALT cap repeal would go to the top 10 percent of taxpayers, while less than 1 percent of the benefit would go to the bottom 60 percent of taxpayers.
- Even targeted SALT cap relief would be regressive and deliver few benefits to the middle class..
Tax experts on the left and right are practically unanimous in their opposition to repealing the SALT cap. It’s not tax reform, it’s tax de-form.
With so many competing priorities, paying for what’s already been proposed will be hard enough. Whether financed with borrowing, tax hikes, or lower spending, there is no reason to add one of the most regressive tax cuts in recent memory.
SALT cap relief should not be part of any investment package, and it does not belong in reconciliation.
For more information, please contact Kim McIntyre, director of media relations, at firstname.lastname@example.org