ICYMI: Suozzi Fights for SALT Cap Repeal in New Wall Street Journal Op-Ed, “A Tax Break for Coronavirus-Hit States”
Congressman Tom Suozzi (D-Long Island, Queens) has published a new op-ed in the Wall Street Journal, where he fiercely advocates for repealing the cap on State and Local (SALT) deductions to give local governments and residents, in states like New York which are hardest hit by the coronavirus, the resources they need in the current battle against the pandemic.
“The cap on SALT deductions must be repealed! During the current pandemic, not only do our taxpayers need the relief, but also because the state and local governments are losing tax revenues as people move away. Nothing could be more damaging to our governors and local officials as they try to combat the coronavirus,” said Suozzi.
The complete Wall Street Journal Op-Ed is available here, and below.
A Tax Break for Coronavirus-Hit States
Return to letting taxpayers deduct all their state and local taxes.
By Tom Suozzi
The Tax Cuts and Jobs Act of 2017 placed a $10,000 cap on the amount of state and local taxes that taxpayers could deduct from their federal taxable income. The SALT cap effectively raised the taxes of millions of Americans in states like New York, New Jersey, California and Illinois. The most recent census data for 2019 show population declines in these states. The cap has given taxpayers an incentive to flee, costing state and local governments valuable tax revenues at a time when they can ill afford it.
When high earners leave states, middle- and low-income earners are left holding the bag. Some have argued that these states should simply cut taxes and services. But it’s hard to imagine anyone arguing that cutting services now would be an appropriate response to the COVID-19 pandemic. By driving high earners away, the SALT cap has hindered states’ ability to address the crisis.
The SALT deduction is as old as the federal income tax. Congress knew in 1913 that it was unfair to force Americans to pay taxes on taxes they’d already paid. Furthermore, the federal government didn’t want to hobble the ability of state and local governments to provide essential services such as police and fire departments, schools, garbage pickup, and public health.
In 2017, to fund a tax cut for corporations and the wealthy, the GOP tax bill broke this century-old covenant and dealt a blow to state and local budgets. This hit, coupled with the fiscal and economic effects of the coronavirus response, has left states facing significant budgetary challenges.
New York is the epicenter of the COVID-19 outbreak in the U.S., and more than half of all taxpayers in my district claim the SALT deduction. It’s bad enough that New Yorkers subsidize the rest of the country by consistently paying billions more to the federal government in taxes than they receive back in services—$26.6 billion more in 2018, the most recent year for which data are available. Now, in addition to dealing with an unfair tax increase, New York’s governor and mayors are being hobbled by an unfair tax policy that is limiting their resources to confront COVID-19.
In December I introduced the Restoring Tax Fairness for States and Localities Act, which the House passed with a bipartisan vote. The bill has been endorsed by the U.S. Conference of Mayors, the National Association of Counties, the National League of Cities, the National Education Association, the American Federation of Teachers, the International Association of Firefighters and the National Association of Police Organizations. It would increase the SALT deduction for 2019 to $20,000 for individuals filing a joint tax return with an adjusted gross income of $100 million or less. It would also eliminate the current cap in 2020 and 2021 for all individual filers with an adjusted gross income of $100 million or less.
There are those who claim that eliminating the cap would only benefit the wealthy. But teachers, health-care workers, first responders and other Americans in my district are struggling to get by. Their incomes, which are higher than in other parts of America, place them squarely in the middle class in places like Long Island, where the cost of living is around 50% higher than the national average. Eliminating the SALT cap would get money back into the hands of middle-class taxpayers in the states hit hardest by COVID-19.
America is dealing with a grave public-health crisis that is worsening by the day. The states hardest hit by the virus are the same states hardest hit by the SALT cap. Sound public policy, fairness and an all-hands-on-deck effort demand that the cap on the SALT deduction be repealed in the next legislative package that addresses this crisis.
Mr. Suozzi, a Democrat, represents New York’s Third Congressional District.