US Politics Mega-thread - Page 3215

At the same time, 96 percent of middle-income households, those making between about $52,000 and $93,000 annually, would get no tax reduction at all. The 4 percent that would benefit would receive an average tax cut of about $400.

By contrast, 93 percent of those making $1 million or more would get a tax cut, averaging about $48,000.

On May 07 2021 10:39 BlackJack wrote:
Considering that state/local income taxes are usually in the range of 10%, the only people this repeal would benefit are people that earn more than $100,000 and thus pay more than the cap of $10,000 in state/local taxes.

On May 07 2021 10:58 micronesia wrote:
I don't see a role reversal. The people who want a tax "cut" are probably the same ones who disagreed with the tax change in the first place. Just because it doesn't hurt the lower and lower-middle class doesn't necessarily mean the SALT cap should stay. Perhaps it should be replaced by a blanket increase in tax rate for the higher federal brackets.

I also think not everyone affected by the cap is "wealthy."


Don't forget the role of property tax in that as well. The cap essentially became an extra federal property tax for people who live in expensive areas.

Repealing the cap would be regressive and costly. The top 1 percent of households would receive 56 percent of the benefit of repeal, and the top 5 percent of households would receive over 80 percent of the benefit, while the bottom 80 percent of households would receive just 4 percent, according to the Tax Policy Center (TPC).[3] The cost of just the SALT provisions over ten years would be roughly $185 billion, according to Joint Committee on Taxation (JCT) estimates.[4] If repeal were later extended through 2025 (the last year the cap is in effect under current law), we estimate that the total cost would grow to nearly $600 billion.[5]

Few middle-income households would benefit. The vast majority of households in the bottom 80 percent are unaffected by the SALT cap and thus would not benefit from its repeal. Fewer than 3 percent of households in the middle income quintile (those between roughly $51,000 and $88,000 in 2018), and fewer than 10 percent of households in the fourth quintile (those between roughly $88,000 and $157,000 in 2018), would receive any tax cut from repeal, according to TPC.[6]

The top 1 percent of households would receive 56 percent of the benefit of repeal, and the top 5 percent of households would receive over 80 percent of the benefit, while the bottom 80 percent of households would receive just 4 percent...

The vast majority of households in the bottom 80 percent are unaffected by the SALT cap and thus would not benefit from its repeal. Fewer than 3 percent of households in the middle income quintile (those between roughly $51,000 and $88,000 in 2018), ... would receive any tax cut from repeal

One obvious point of comparison is the TCJA package [Trump's "Tax Cuts and Jobs Act of 2017"] as a whole, which skewed strongly towards the rich. Sen. Schumer described it as “a cynical one-two gut punch to the middle class.” Certainly, it was a pro-rich bill overall. Most of the benefits of the TCJA went to the top fifth, and 20 percent went to the top 1 percent. But lifting the SALT cap would be much more favorable to the rich—with almost three times as much of the benefit going to the top one percent (57% vs. 21%):

On May 07 2021 14:22 ChristianS wrote:
I mean, there are more variables in tax policy than how progressive any given policy is. A gas tax is regressive, but probably good policy and you can offset the regressiveness in other ways if you want to. IMO SALT repeal was dumb policy meant to penalize blue states, and reinstating it is an obvious choice. If you want to tax rich people just do it, SALT is not (and never was) the loophole they’re using to pay so little in taxes, and deductions should be considered on their own merits, not as backdoors to making the overall system more progressive or regressive than the nominal rates suggest.

On May 07 2021 16:05 BlackJack wrote:


I agree with the premise of your post that tax policy should be judge on its own merits instead of just whether or not it is progressive/regressive. But I think if you're proposing reinstating a tax deduction that could cost hundreds of billions, the most of which will go to the top 1%, then you should have some really good arguments. It definitely wouldn't be the "obvious choice" to me.

On May 07 2021 22:28 ChristianS wrote:
Buy my point is, if you think wealthy people should pay more you’re wanting more progressive taxation. Adjust the marginal rate accordingly. SALT deduction says income you already paid toward another tax isn’t really income, which, well, it isn’t. In the same way that income that was actually reimbursement for business expenses, or income that went to paying exorbitant healthcare costs shouldn’t be treated as income. You know, a deduction.

Think of it this way: eliminating SALT deduction only taxes rich people more in blue states. Raising the marginal rate taxes them more in *all* states. The latter seems obviously preferable to me.

Eliminating the SALT deduction caps is no small budgetary matter: CBPP estimated a repeal could cost the government $600 billion over nine years. For comparison, that’s roughly equal to the revenue that would be generated over fifteen years from Democrats’ reported plan to raise the corporate tax rate from 21 percent to 25 percent, instead of the 28 percent proposed by Biden.

Those revenues were supposed to fund desperately needed roads, bridges, and other public infrastructure, but if the SALT Caucus has its way, they could instead help finance new write-offs for wealthy people’s property taxes.

On May 07 2021 23:21 ChristianS wrote:
Oh, idk about priority level. If the Dems could pass a bill raising the marginal rate or pass a bill reinstating SALT I’d certainly prefer raising the marginal rate. But one of the problems I have with tax discussions is everyone reducing every question to making the system more or less progressive, and there’s just a lot more going on than that.

Here’s one I’d probably prioritize more than either of the other two: make rent payments (at least partially) deductible the way mortgage payments are (at least partially) deductible. I’ve never understood why owners have this advantage over renters, and I think it’d make a huge difference in a lot of people’s lives.

On May 07 2021 23:21 ChristianS wrote:
Here’s one I’d probably prioritize more than either of the other two: make rent payments (at least partially) deductible the way mortgage payments are (at least partially) deductible. I’ve never understood why owners have this advantage over renters, and I think it’d make a huge difference in a lot of people’s lives.

On May 08 2021 00:39 KwarK wrote:
The discussion should be on the restoration of exemptions and the lowering of the standard deduction, not on SALT.