The elimination of the SALT deduction that largely benefits the middle class has a broad swath of citizens groups and state and local leaders concerned. (Hamza Butt/flickr)
Among the proposed policies on the chopping block is the elimination of a provision that allows homeowners to deduct state and local property taxes from their federal taxes.
The SALT deduction largely benefits the middle class, with nearly 87 percent of taxpayers who claim it having adjusted gross incomes of less than $200,000.
Andrew Koneschusky, a spokesman for Americans Against Double Taxation, explains the impact.
“If the deduction were to be removed, essentially more of their income would be exposed to federal taxation because you would be paying the full value of your federal taxes as well as your income taxes and your property taxes,” he points out.
The National Association of Realtors estimates households with incomes between $50,000 and $200,000 would see an increase of $815 if SALT were eliminated.
A bipartisan collection of groups, including the National Sheriffs’ Association, National Association of Counties and the International Association of Fire Fighters, are part of a coalition to preserve SALT.
Shelby County Mayor Mark Luttrell is among city leaders fighting to protect the SALT deduction. He’s concerned the elimination of SALT will make it challenging for local municipalities to continue to tax to cover investments in infrastructure, public safety, education and others.
“Our concern with this particular tax bill is it’s shifting a significant amount of money that state and local government has relied upon, really, for the last 100 years,” Luttrell explains.
Koneschusky says the SALT deduction is a tempting line item for lawmakers looking for ways to increase federal revenue.
“The SALT deduction, it’s a large expenditure in the tax code and so it’s something that could offset other cuts elsewhere, which is why it’s being eyed,” he points out.
While eliminating SALT will increase taxes for the middle class, the White House also is aiming to reduce the corporate tax rate from 35 percent to 20 percent. That move would reduce taxes for the wealthy.
