Trump Aims to Remove $10,000 SALT Deduction Cap Established by Him

Former President Donald Trump is revisiting a controversial aspect of his presidency regarding tax policy, specifically the state and local tax (SALT) deduction. In a recent post on Truth Social, he proposed eliminating the $10,000 cap on this deduction that was established during his administration as part of the 2017 Tax Cuts and Jobs Act, which he has long championed.

In his announcement, Trump claimed he would “get SALT back, lower your taxes, and so much more,” signaling a shift as he gears up for the upcoming November election. This statement was made just before a scheduled speech at the Nassau Coliseum in Long Island.

Trump’s promise to remove the SALT deduction cap comes alongside a broader effort to propose additional tax cuts aimed at key demographics, particularly appealing to senior citizens by eliminating taxes on Social Security benefits. His plans also include ending income taxes on overtime pay and for tipped workers, which he argues would benefit lower- and middle-income Americans.

However, reactions to his proposal have been mixed, with skepticism arising from lawmakers, economists, and policy experts. Chris Koski, a political science professor, pointed out the inconsistency in Trump’s stance, highlighting that the SALT deduction cap was a central component of the only major legislative reform enacted during his presidency.

Representative Tom Suozzi, a Democrat from New York’s Nassau County, expressed that he was pleased to see Trump reverse his earlier stance on the SALT tax cap, urging the former president to persuade Republican legislators to support the restoration of the full deduction.

Suozzi elaborated that the cap has negatively impacted his constituents for the past seven years. Similarly, Senator Chuck Schumer criticized Trump’s inconsistency, stating that the former president’s actions hurt many Long Island families and questioning the sincerity of Trump’s new stance.

When asked for specifics regarding Trump’s proposal to restore the SALT deduction, a spokeswoman for Trump’s campaign reiterated that his administration would focus on making life affordable through tax relief for working individuals and seniors.

The SALT deduction allows taxpayers who choose to itemize to deduct state and local taxes, including property taxes and sales taxes, from their federal tax liabilities. Prior to the introduction of the 2017 Tax Cuts and Jobs Act, there was no upper limit on these deductions.

The capping of the deduction at $10,000 has hit homeowners particularly hard in states with high property taxes, notably impacting those in traditionally Democratic areas. According to estimates from the Treasury Department at the time of the law’s passage, approximately 11 million taxpayers from states like New York and New Jersey would collectively lose roughly $323 billion in deductions under the cap.

Homeowners with significant property taxes in states such as New York, New Jersey, and California were the primary beneficiaries of the full SALT deduction. Nevertheless, it is worth noting that the deduction favored higher-income individuals, with approximately 80% of the benefits going to those earning over $100,000 annually, as reported by the Tax Foundation.

The $10,000 limit has increasingly affected middle-class homeowners facing rising property taxes and incomes. Despite some efforts to either repeal or raise the SALT cap, no significant changes have occurred thus far. Earlier in the year, attempts to increase the cap to $20,000 for married couples were blocked in the House.

The SALT deduction cap is set to expire in 2025, like many other provisions of the Tax Cuts and Jobs Act. Trump has expressed intentions to extend these tax cuts, but the financial implications of repealing the SALT cap could be substantial.

Analyses from budget-focused organizations suggest that removing the cap could cost around $1.2 trillion over a decade, and extending the provisions of the Tax Cuts and Jobs Act could increase the national deficit significantly more.

Experts caution that lawmakers should refrain from extending the Tax Cuts and Jobs Act without a strategic plan to offset the costs and manage the nation’s debt more effectively.

Source: CBS News