As President Biden Bleats ‘Pay Your Fair Share,’ Democrats Guarantee A Net Tax Cut For Wealthy Blue State Residents

House Democrats Are Guaranteeing ‘SALT Will Be In The End Game’, ‘SALT Will Be In The Bill’

“Democrats are coalescing around a plan that would delay the state and local tax deduction cap, known throughout D.C. as SALT, for five years, according to three sources familiar with the process. The plan, still to be finalized, would lift the cap from years 2021-2025 and then go back in place from 2026-2031.” (“Democrats Are Settling On A Plan To Include State And Local Tax Relief In Their Final Social Spending Bill. It Would Mean Temporary Relief For Five Years,” Politico’s Congress Minutes, 11/02/2021)

REP. JOSH GOTTHEIMER (D-NJ): “Great news! Here come tax cuts for New Jersey families! Reinstating the State and Local Tax (SALT) deduction will be in the final legislative package. Now, we need to get it to the floor for a vote. We’re going to get this done.” (Rep. Josh Gottheimer, @RepJoshG, Twitter, 11/02/2021)

• GOTTHEIMER: “I believe, based on every single conversation that I’ve had with leadership, my Senate colleagues and the White House, that SALT will be in the bill… They know they don’t have the votes without it.” (“Democrats Still Weighing Changes To Limit On State And Local Taxes Deduction,” CNBC, 10/29/2021)

REP. RICHARD NEAL (D-MA), House Ways and Means Committee Chairman: “SALT will be in the end game.” (“White House Framework Includes Tax Increases, Leaves Out Billionaire Tax,” The Hill, 10/28/2021)

REP. TOM SUOZZI (D-NY): “I am confident it will be part of the final deal.” (“Democrats Still Weighing Changes To Limit On State And Local Taxes Deduction,” CNBC, 10/29/2021)

• SUOZZI: “No SALT, No Deal.” (“‘Mr. SALT’ and N.J. Ally Fight Ocasio-Cortez to Revive Tax Break,” Bloomberg, 8/10/2021)

‘High-Income Coastal Professionals Look Likely To Emerge As Significant Winners From The Democrats’ Proposed Tax Agenda’: ‘A Five-Year [SALT Cap] Repeal Would Cost Roughly $475 Billion, With $400 Billion Of The Tax Cut Going To The Top 5 Percent Of Households’, ‘More Than Any Other Part’ Of Democrats’ Reckless Taxing-And-Spending Spree

“High-income coastal professionals look likely to emerge as significant winners from the Democrats’ proposed tax agenda... The potential result: Many residents of New York, New Jersey, California and other states who make more than the $400,000 threshold that President Biden set for tax increases could end up with tax cuts… The resulting state and local tax deduction would actually be more generous than it was before the 2017 tax law.” (“Democrats Consider Tax Cuts for Many High Earners in New York, New Jersey and California,” The Wall Street Journal, 10/29/2021)

COMMITTEE FOR A RESPONSIBLE FEDERAL BUDGET: “According to press reports, policymakers are considering adding a five-year repeal of the $10,000 cap on the State and Local Tax (SALT) deduction to their Build Back Better reconciliation package – including one retroactive year. As we’ve shown before, this policy is highly regressive and would turn Build Back Better into a net tax cut for the vast majority of high-income households. A five-year repeal would cost roughly $475 billion, with $400 billion of the tax cut going to the top 5 percent of households. That is more than any other part of Build Back Better, including the Child Tax Credit, spending on child care and pre-K, climate-related tax credits, or health care funding. … In reality, this is setting the stage for over $1 trillion of tax cuts over the decade. Claims that SALT cap repeal would not add to the debt are highly misleading and not grounded in reality.” (“5-Year SALT Cap Repeal Would Be Costliest Part of Build Back Better,” Committee for a Responsible Budget, 11/02/2021)

Even A Two-Year Repeal Of The SALT Cap Would Result In A Net Tax Cut For Wealthy Americans, Disproportionately Benefitting Those In High-Tax Blue States

COMMITTEE FOR A RESPONSIBLE FEDERAL BUDGET: “While much of the discussion surrounding the Build Back Better reconciliation package has focused on tax increases on the rich, the final legislation could potentially deliver a tax cut to high-income households – at least in the first two years. Though the current Build Back Better framework includes a number of tax increases focused on higher earners, the regressive tax cut from adding in repeal of the $10,000 cap on the State and Local Tax (SALT) deduction would more than counter those increases.” (“Reconciliation May Deliver a Tax Cut to the Rich,” Committee for a Responsible Federal Budget, 10/29/2021)

• “[A] two-year SALT cap repeal – if included – would reduce taxes on the top 5 percent of earners by over $70 billion in FY 2023. The result would be a $30 billion net direct tax cut for those in the top 5 percent when SALT cap repeal is in effect. Those in the top 1 percent would also face a net tax cut, though we have not estimated the magnitude.” (“Reconciliation May Deliver a Tax Cut to the Rich,” Committee for a Responsible Federal Budget, 10/29/2021)

• “The tax cut is even larger when excluding those making over $10 million per year. Recent estimates from Jason Furman found that repealing the cap on the state and local income tax deduction alone (not the property tax) would provide a $472,000 annual tax cut to a couple in California earning $9.9 million per year…” (“Reconciliation May Deliver a Tax Cut to the Rich,” Committee for a Responsible Federal Budget, 10/29/2021)

Committee For A Responsible Federal Budget: ‘Over Two Years, SALT Cap Repeal Would Distribute Over $300,000 To A Household In The Top 0.1 Percent Of Earners’

COMMITTEE FOR A RESPONSIBLE FEDERAL BUDGET: “SALT cap repeal would almost exclusively benefit higher earners. As we’ve shown before, 90 percent of the benefit of SALT cap repeal would go to the top 10 percent of earners. … Over two years, SALT cap repeal would distribute over $300,000 to a household in the top 0.1 percent of earners compared to only $40 for a family in the middle of the income spectrum.” (“SALT Cap Repeal Does Not Belong in Build Back Better,” Committee For A Responsible Budget, 10/25/2021)

Joint Committee On Taxation: 94% Of The Benefits Of Repealing The Cap On State And Local Tax Deductions Would Go To Taxpayers Making Over $200,000

JOINT COMMITTEE ON TAXATION: “[A] proposal to repeal the $10,000 limitation on the deduction for State and local taxes beginning in 2019 … is estimated to result in a decrease in tax liability for 13.1 million taxpayers, 94 percent of which have $100,000 or more of economic income. Additionally, approximately 99 percent of the decrease in tax liability accrues to taxpayers with $100,000 or more of economic income.” (“Background On The Itemized Deduction For State And Local Taxes,” Joint Committee on Taxation, JCX-35-19, 6/24/2019, p. 14)

• Further, 94 percent of the benefit from repeal of the deduction for state and local taxes would flow to taxpayers with incomes over $200,000 per year. And only 6 percent of the benefit from repeal would go to taxpayers with incomes under $200,000. (“Background On The Itemized Deduction For State And Local Taxes,” Joint Committee on Taxation, JCX-35-19, 6/24/2019, p. 14)

• And 52 percent of the benefit from repeal of the deduction would go to those with incomes over $1 million. (“Background On The Itemized Deduction For State And Local Taxes,” Joint Committee on Taxation, JCX-35-19, 6/24/2019, p. 14)

According to Joint Committee on Taxation estimates, repealing the SALT cap would result in large tax cuts for millionaires and almost no benefit for middle class taxpayers making between $50,000 and $100,000 per year. (“Background On The Itemized Deduction For State And Local Taxes,” Joint Committee on Taxation, JCX-35-19, 6/24/2019, p. 14; “Overview Of The Federal Tax System As In Effect For 2019,” Joint Committee on Taxation, JCX-9-19, 3/20/2019, p. 34)

• An estimated reduction in tax liability of $40.4 billion from repeal of the cap would mean that taxpayers with $1,000,000 or more in income would see a tax cut of $60,000 while taxpayers with between $50,000 and $100,000 in income would see a tax cut of less than $10. (“Background On The Itemized Deduction For State And Local Taxes,” Joint Committee on Taxation, JCX-35-19, 6/24/2019, p. 14; “Overview Of The Federal Tax System As In Effect For 2019,” Joint Committee on Taxation, JCX-9-19, 3/20/2019, p. 34)

Tax Policy Center: ‘About 96 Percent Of The Benefits’ Of Repealing The Cap On State And Local Tax Deductions ‘Would Go To The Top 20 Percent Of Taxpayers’

TAX POLICY CENTER: “Congressional Democrats have introduced several proposals to repeal the new cap on state and local deductions. About 96 percent of the benefits for doing so would go to the top 20 percent of taxpayers, according to the Tax Policy Center. Other analyses have found similar distributional impacts of the cap.” (“Democrats Said A GOP Tax Law Provision Would Devastate Blue States. That’s Not Happening.,” The Washington Post, 5/01/2019)

• “The top 1 percent of households, those making $755,000 or more, would receive more than 56 percent of the tax cut.” (Howard Gleckman, “High-Income Households Would Benefit Most From Repeal of the SALT Deduction Cap,” TaxVox: Individual Taxes, Tax Policy Center, 9/24/2018)

President Biden: ‘If They Want To Be A Millionaire… All I’m Asking Is: Pay Your Fair Share. Pay Your Fair Share. Pay Your Fair Share.’

PRESIDENT JOE BIDEN: “I want everyone to be able to — if they want to be a millionaire or billionaire, to be able to seek their goal. But all I’m asking is: Pay your fair share. Pay your fair share. Pay your fair share.” (President Biden, Remarks, 10/28/2021)