Among leaked details of the still not fully written Trump tax plan is a final repeal of the estate tax, which would save a handful of millionaires and poor planners from what South Dakota’s members of Congress have somewhat inaccurately called a “double tax.”
Yet Republicans may be imposing a sort of double tax (arguably an inaccurate term here, too, but let’s see Noem and Thune apply this analysis consistently!) on many more Americans by repealing the 104-year-old (yes, since we enacted federal income tax) deduction for state and local taxes (SALT). The move appears to be a way to take an extra dig at blue states with higher local tax rates. Officials in Erie County, New York (where Buffalo is), have their steam up against repealing the SALT deduction:
Erie County Executive Mark Poloncarz says those same people would also see tax increases with no more state or local levies for which they may claim a deduction. He estimates the net result as an $815 increase for homeowners.
“If there’s $815 more dollars that have to be paid by the average homeowner on an annual basis, that’s $815 they won’t have in their pockets to go shopping, to go to Bills games, to go to stores, to go to entertainment, which means that’s a loss of sales tax,” Poloncarz said.
The home selling industry warns that the elimination of SALT would also deal an economic blow to the housing market. The National Association of Realtors commissioned Price Waterhouse Coopers to conduct a study on just how much losing SALT would impact real estate. The report suggests average home values would quickly drop 10 percent because the loss of SALT would take many would-be home buyers off the market [Michael Mroziak, “Poloncarz, Higgins Urge Congress to Preserve ‘SALT’ Tax Deduction,” WVIK Radio, 2017.09.24].
Repealing the SALT deduction is part of a cluster of GOP tax proposals that an analysis this summer by the Tax Policy Center found could result in tax hikes for a quarter of middle-class taxpayers… which doesn’t sound like what Trump promised, but we know what happens if we try to ascribe meaning to any of the sounds emanating from the current occupant of the White House.
Gee, Republicans could propose tax reforms that would actually help the economy, like, say, expanding the Earned Income Tax Credit, which new research in New York shows boosts employment, income, and child support payments. Instead, Republicans want to make getting the EITC far more complicated… which is the opposite of what they are trying to do for their upper-income constituents.
Folks, if you want this problem solved—if you want real tax reform that simplifies the code and helps those who need help the most without giving extra-special favors to Manhattan billionaires—you’re just going to have to wait… and elect a whole lot of Democrats in the next two elections.