The budget discussions are coming fast and furious this week so I will be writing a bit more frequently.
There have been some Republican coalitions forming who oppose and could block the tax Bill currently in Congress. I like the idea of a political party holding itself accountable so I dug into it.
What Exactly Is The SALT Caucus?
One of the coalitions is the so-called SALT caucus. SALT stands for state and and local taxes. Taxpayers are permitted to deduct what they pay in state and local taxes on their federal income tax returns. The deduction includes things like state income tax and local property tax. For those who make substantial income and own expensive homes, this deduction can be quite valuable. Only about 10% of tax filers claim a SALT deduction and those tend to be wealthier Americans. Prior to 2017, the SALT deduction was unlimited. In 2017, there was a $10K cap introduced.
The SALT Caucus Wants More Tax Cuts For The Wealthy
The Bill proposes to increase the cap from $10K to $30K for joint filers making up to $400K per year. This is a tax break that would favor the wealthy. The SALT caucus thinks the $30K cap is still too low. They want to increase the cap to $62K for individuals and $124K for joint filers. This would favor an even wealthier class of taxpayers.
After I first published this post, I received a comment from a friend who is a school teacher in the Bronx. She explained that she pays exorbitant property taxes on a teacher’s salary and could benefit from an increase in the SALT cap. I take that point. There are some working class folks who would benefit from an increase in the SALT cap. If the Bill was limited to working class folks, I would not have a problem with it. But the Bill is not limited to working class folks. The vast majority of people who will benefit from this Bill are wealthy.
More to the point, after I first published this post, the SALT Caucus announced that it had reached a compromise. The upper income threshold was increased from $400K to $500K. The cap remains at $30K. In other words, the SALT caucus made sure that even more wealthy people would benefit from the increased cap. They folded like a cheap suit on the cap itself.
We Need To Get Back To The Basics Of Reducing Our Debt And Deficits
So I am reading all of this and I cannot help but think, what are we doing here? Our government can ill afford to be handing out tax breaks, let alone tax breaks that favor the wealthy. Increasing the SALT cap for Americans making up to $500K per year favors the wealthy and exacerbates our deficit. The only calculations these representatives seem capable of performing are political calculations. They are incapable of basic arithmetic. They certainly do not have the skill set to manage the debt crisis we are facing. Something must change.