- The House GOP unveiled its massive tax reform bill Thursday. One of the biggest hangups for Republicans in states like New York, New Jersey, and New York has been the proposed elimination of the state and local tax (SALT) deduction, which allows people to deduct those taxes from their federal bill. House Ways and Means Committee Chair Kevin Brady said Tuesday the GOP reached a deal that would allow people to deduct state and local property taxes up to $10,000 but not income or sales taxes.
The Trump administration and congressional Republicans took a step forward in their attempt to overhaul the US tax code on Thursday by releasing legislation proposing sweeping changes.
The “Tax Cuts and Jobs Act” will include a broad set of proposed changes to the corporate and individual tax system, building off a nine-page framework the White House and congressional Republican leaders dropped in September.
Among the details of the new bill emerging Thursday morning is a proposed elimination of the state and local tax (SALT) deduction, which is a benefit that allows people to deduct those taxes from their federal bill. House Ways and Means Committee Chair Kevin Brady said Tuesday the GOP reached a deal that would allow people to deduct state and local property taxes up to $10,000 but not income or sales taxes.
While most House Republicans are in favor of getting rid of the SALT deduction, this proposal is likely to be one of the biggest hangups for those House Republicans in states like New York, New Jersey, and California, which could prove to be an obstacle to the bill’s passage.
- Andy Kiersz/Business Insider
The two largest beneficiaries of the SALT deduction are higher earners and states with a lot of high-income residents, according to the Tax Policy Center.
Most of the claimants that benefit from the deduction live in traditionally Democratic states like California and New York. The Committee for a Responsible Federal Budget found that New York and California receive about 30.5% of the total benefits from the SALT deduction.
52 congressional districts held by Republicans registered above-average use of the SALT deduction in 2015, according to data from the Internal Revenue Service cited by Bloomberg. Those include a number of districts in New York, New Jersey, California, and an Illinois district of Representative Peter Roskam, the chairman of a key panel on tax policy.
Some Republican House members in those states have already spoken out. Congressman Lee Zeldin (R-NY) said he’s a “No” on the bill in its current form, citing the proposal to eliminate the SALT deduction.
Congressman Tom MacArthur (R-NJ), meanwhile, went on Fox Business on Wednesday to defend keeping the property tax deduction.