Democrats’ Repeal of SALT Cap Would Widen Income Inequality

Expert confirms that repealing limit would provide the biggest benefits to the richest households
April 22, 2021 — Blog    — Select Revenue Measures    — Talking Points    — The Tax Tracker   

Repealing the cap on state and local tax (SALT) deductions, which some Democrats are fighting to include in their partisan spending package, would widen income inequality, according to experts.

Earlier this week, Dorothy Brown, law professor at Emory University, testified before the Senate Finance Committee that repealing the $10,000 cap on SALT deductions would benefit wealthy households the most.

KEY TAKEAWAYS:

  • The liberal Institute of Taxation on Economic Policy (ITEP) estimates that 85 percent of the tax cuts from the repeal of the SALT cap would go to the richest 5 percent of taxpayers, mostly in high-tax states like New York and California.
  • Repealing the cap on SALT deductions will give liberal governors and mayors an excuse to push for across-the-board tax hikes on working families.
  • Democrats’ fight for tax cuts for the wealthy is incredibly tone deaf, particularly as they hold out their support for Biden’s $2 trillion tax hikes on blue-collar Americans, unless and until they get the tax cut.
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