The Sacramento Bee reports:
One of the most contentious fights of Republicans’ 2017 tax overhaul is about to go another round.
Democrats from high-tax states — including California — are preparing to launch a new push to restore the state and local tax deduction, which the 2017 law capped, when Democrats take control of the House next year.
The SALT deduction, as it’s known, allows taxpayers to subtract state and local income, sales and property taxes from their federal tax payment, as part of their itemized deductions. It’s especially popular in states where local taxes and the cost-of-living are high. Members of Congress from those states — particularly New York, New Jersey and California — protested the cap, which allows people to deduction up to $10,000 of state and local taxes. But they failed to strip it from the 2017 law.
With Democrats in the majority in the House next year, however, SALT’s top defenders are ready to take another swing. And they are hoping that, as taxpayers begin to file their returns under the new rules in the coming months, the backlash will give their effort a political boost.
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Given the partisan divided in Congress, it’s unlikely lawmakers will be able to pass new SALT provisions in 2019, but proponents of the deduction want to lay the groundwork for a deal in the coming years. They have some leverage: the $10,000 cap on the deduction, like most of the rest of the individual tax changes in last year’s law, expire in 2025. But that also means the pressure to address the issue is still several years away.
“Congress being Congress, it’s unlikely that they’re going to deal with any of it until 2025,” said Howard Gleckman, a senior fellow at the Urban-Brookings Tax Policy Center. The politics around SALT are also complicated, dividing politicians not just along party lines but also geographically. According to the nonpartisan Tax Foundation, just six states – California, New York, New Jersey, Illinois, Texas, and Pennsylvania – claimed more than half of the value of all SALT deductions nationwide. California alone was responsible for nearly 21 percent of all SALT deductions.
Will the Democrats be able to bring back big tax deductions for the wealthy after 2025?
