Tax code

Nicklaus: SALT debate will show whether Democrats really want a progressive tax code | Business

Rep. Bill Pascrell, DN.J., left, and Rep. Danny Davis, D-Ill., Chat as the House Ways and Means Committee continues to work on a broad tax increase proposal on big business and the rich to fund President Joe Biden’s $ 3.5 trillion national reconstruction plan, on Capitol Hill in Washington on Tuesday, September 14, 2021. (AP Photo / J. Scott Applewhite)

J. Scott Applewhite

If Congressional Democrats believe what they say about making rich Americans pay $ 3.5 trillion for national priorities, they must skip SALT.

The acronym is a Washington abbreviation for state and local government tax deduction, which can become a key sticking point as Democrats work out the details of their major spending and taxes.

The deduction was capped at $ 10,000 as part of the Republicans-led tax cut in 2017. Many Democrats have pledged to remove that limit when they return to power.

Repealing the cap is not part of the package crafted by the House Ways and Means Committee, but several Democratic representatives have said they will not vote for a bill that does not include it. Given its small majority, the party needs their votes to pass the package using the budget reconciliation rules.

There are two big problems with repealing the SALT cap: It’s expensive, and almost all of the benefits would flow to wealthier Americans. You know, the people Democrats always blame for not paying enough taxes.

The repeal would cost around $ 85 billion a year. That’s triple the combined cost of universal kindergarten and free community college, two of President Joe Biden’s priorities.

Looked at another way, lifting the SALT cap would consume four-fifths of the annual income of the Democrats’ two big proposals, raising the corporate tax rate to 28% and the highest personal tax rate to 39. , 6%.

Leave a Reply

Your email address will not be published.