New Jersey Democratic Rep. Josh Gottheimer speaks with reporters at the Capitol's House Chambers on September 23, 2021. Anna Moneymaker/Getty Images
Democrats are ready to end a Trump-era policy of tax cuts for wealthy residents.
Democrats previously argued that limiting the deduction for local taxes would have a greater impact on wealthier blue states.
One budget expert says it is a "gigantic, expensive tax cut for rich".
Democrats will soon include a tax cut in their $1.75 trillion social expenditure plan, which will greatly benefit those with higher incomes.
Rep. Josh Gottheimer, New Jersey, tweeted that the provision was added to the plan on Tuesday. Insider was informed by a Democratic aide who has been involved in negotiations that Democrats are looking at a five year tax break that would run through 2025. This development was first reported by Punchbowl News.
Retroactive to the current year, the break would also apply.
-Rep Josh Gottheimer, (@RepJoshG), November 2, 2021
SALT allows taxpayers to subtract their state and local taxes from their federal obligation. Trump's 2017 tax plan caps the previously unlimited deduction at $10,000. This is most noticeable for taxpayers living in areas where there are high local taxes. These areas tend to be in bluer states, like New Jersey.
Trump's tax plan mainly affected people who own properties in multiple states. They were able deduct their state-property taxes in New York City if they owned a property in New Jersey, Pennsylvania or Connecticut.
The SALT Caucus is Revenged
Bipartisan support exists for repealing the law: 32 lawmakers from both sides formed a "SALT Caucus," which consisted of 32 members. Nancy Pelosi, Speaker of the House, stated that Trump's cap was "mean-spirited" because it targeted wealthy residents in blue states. The bill was also supported by Chuck Schumer, the New York Senate Majority Leader.
Marc Goldwein is a budget expert from the nonpartisan Committee for a Responsible Federal Budget. He projects that the five year SALT deduction will amount to a tax cut of $500 billion, with $400 billion going to the top 5%.
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Goldwein stated that it was a good question about priorities, when people are willing to spend two-and-a-half times as much on tax cuts for the wealthy as they are on child tax credit or the EITC expansion which mainly goes to the poor and middle classes.
Jason Furman, an ex-top economist for President Barack Obama, tweeted that he believed most Americans with net worths between $50 and $300 million would get a tax cut.
Furman wrote that the bill would do more to benefit the super-rich than it would for climate change, childcare, or preschool. It's absurd.
This repeal is not a consensus among all Democrats.
Rep. Alexandria Ocasio Cortez stated that she believes "it's just an giveaway to the wealthy," which is quite different from her fellow New Yorkers. On Twitter, she stated that Congress should not endorse a "100% repeal."
Insider asked Senator Cory Booker from New Jersey about the SALT tax deduction for wealthy taxpayers. He replied, "You clearly haven't come to New Jersey."
Booker said, "I live in a low-income neighborhood." "People pay more than $10,000 in taxes. What are you talking about?
Insider reported that "this is a middle-class problem and it's something which's really a concern to people."
Democrats have used the party-line reconciliation process in order to approve the plan, over the united Republican opposition. They have very little room for maneuver since they can only spare three votes from the House and zero in Senate to make President Joe Biden’s economic plans law.
Business Insider has the original article.