Democrats Vote In Favor Of A Tax Break For The Wealthy

FLASHBACK: Democrats Spent Months Holding Up COVID Relief As They Insisted Any Bill Include Their Tax Cut For Wealthy Residents Of High-Tax States

“House Speaker Nancy Pelosi, D-San Francisco, has made a priority of rolling back the SALT deduction cap, which was included in the Republican-passed tax bill that former President Donald Trump signed in late 2017. That legislation capped federal deductions for state and local taxes to $10,000, or $5,000 each for married couples filing separately. Pelosi has cited repealing the cap as a possible way to provide relief to Americans during the coronavirus pandemic, and Senate Majority Leader Chuck Schumer, D-N.Y., has also sought to restore SALT deductions.” (San Francisco Chronicle, 2/02/2021)

“As lawmakers prepare for another round of fiscal stimulus to address economic fallout from the coronavirus pandemic, Speaker Nancy Pelosi suggested the next package include a retroactive rollback of a tax change that hurt high earners in states like New York and California.” (“Pelosi Floats New Stimulus Plan: Rolling Back SALT Cap,” The New York Times, 3/30/2020)

• “In an interview with The New York Times, Ms. Pelosi said the next phase of an economic rescue package should include additional measures to get more money directly to individuals — like the $1,200 direct payments for low- and middle-income taxpayers that were authorized in the $2 trillion bill that President Trump signed on Friday. That could be achieved, she said, by having Congress ‘retroactively undo SALT,’ a reference to a cap on the state and local tax deduction that Republicans included in their 2017 tax overhaul. That limit prevents households from deducting more than $10,000 a year in state and local tax expenses from their federal tax bills.” (“Pelosi Floats New Stimulus Plan: Rolling Back SALT Cap,” The New York Times, 3/30/2020)

Q: “I understand you’re pushing for a repeal of the SALT caps in this--in this package. Can you tell me why that’s pertinent and…”
SEN. CHUCK SCHUMER (D-NY): “Well, it’s not just on pushing it. There is a two-year repeal in the HEROES Bill and I believe it should stay in.” (Sen. Schumer, Press Conference, 08/04/2020)

Both Versions Of Democrats’ So-Called ‘HEROES Act’ Included The Repeal Of The SALT Cap

May 2020: PAGE 228: “SEC. 20161. ELIMINATION FOR 2020 AND 2021 OF LIMITATION ON DEDUCTION OF STATE AND LOCAL TAXES.” (H.R. 6800, 116^th Congress)

• “House Democrats released the text Tuesday for its latest proposed Covid-19 relief measures. … Tucked away in the bill is a measure that will reinstate the so-called SALT itemized deduction for 2020 and 2021. The Tax Cuts and Jobs Act, which went into effect in 2018, limited the amount of state and local tax deductions filers could claim on their tax returns to $10,000. … The new proposal doesn’t specify what’s supposed to happen after 2021.” (“House Democrats’ Stimulus Bill Rolls Back $10,000 SALT Cap For 2 Years,” CNBC, 5/12/2020)

October 2020: PAGE 789: “SEC. 151. ELIMINATION FOR 2020 LIMITATION ON DEDUCTION OF STATE AND LOCAL TAXES.” (House Rules Committee Print 116-66, House Amendment to the Senate Amendment to H.R. 925, 9/29/2020)

Economists Say Repealing The SALT Cap Is ‘Regressive Tax Policy’ That ‘Would Not Benefit The People Who Need Help’

“Economists and tax experts from across the political spectrum are panning House Speaker Nancy Pelosi’s idea to stimulate the economy in the next bailout bill by raising the federal cap on tax deductions for state and local taxes. The move wouldn’t give the economy much of a boost, they say.” (“Economists Pan Pelosi’s Proposal To Lift Cap On State And Local Tax Deductions In Next Bailout,” Politico, 3/31/2020)

KARL SMITH, Vice President of Federal Tax and Economic Policy at the Tax Foundation: “A retroactive repeal is the worst of both worlds… It increases the probability that bad tax policy will be made permanent without the certainty to even allow the potential side-benefits to real estate markets and state and local government to materialize.” (“Economists Pan Pelosi’s Proposal To Lift Cap On State And Local Tax Deductions In Next Bailout,” Politico, 3/31/2020)

“Many liberal economic policy analysts also oppose lifting the SALT cap, calling it regressive tax policy.” (“Pelosi Floats New Stimulus Plan: Rolling Back SALT Cap,” The New York Times, 3/30/2020)

• SETH HANLON, a Senior Fellow at the Liberal Center for American Progress: “[T]here are ways you could target it to truly middle-class people. The problem is, relatively few middle-class people claim SALT. … [I]t doesn’t strike me as the most effective way of targeting economic stimulus.” (“Pelosi Floats New Stimulus Plan: Rolling Back SALT Cap,” The New York Times, 3/30/2020)

• MICHAEL LINDEN, Executive Director of the Progressive Groundwork Collaborative: “This is not a good idea… It would not help the economy heal, and it would not benefit the people who need help. … These are people who won’t spend the extra money and don’t really need it… That’s why they were left out of the cash assistance in the first place.” (“Economists Pan Pelosi’s Proposal To Lift Cap On State And Local Tax Deductions In Next Bailout,” Politico, 3/31/2020)

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)