Now that Democrats — who have made a career out of demanding soak-the-rich taxes in order to redistribute it to the poor — are in control of the U.S. House of Representatives, one of their first priorities will be to provide a tax break for the rich — in certain Democrat-controlled states.
According to Forbes magazine and others, a top priority will be a repeal of the $10,000 cap on IRS deductions for state and local taxes (SALT) that was part of the Tax Cuts and Jobs Act passed in December 2017.
According to the Tax Policy Center, three-quarters of any benefit from repealing the SALT deduction cap would go to households making $153,000 or more. The top 1 percent of households, those making $755,000 or more, would receive more than 56 percent of the benefit. The Center calculated repeal would cut federal tax revenues by $620 billion over the coming decade.
The Tax Foundation says 88 percent of the benefits of a repeal would flow to those making more than $100,000 a year.
So a repeal benefits the rich, but just the rich in certain states.
Nevadans — along with residents of New Hampshire, Florida, Wyoming, Texas, South Dakota and Alaska — used to be able to deduct about 1 percent or less of their adjusted gross income, while those who live in New York, Maryland, D.C. and California could deduct more than 5 percent.
Nearly one-third of the additional tax dollars generated by the SALT cap comes from Californians and New Yorkers, both heavily Democratic states.
Using 2010 statistical data from the IRS, the latest available, you find Californians who filed for state and local income tax deductions claimed deductions of $10,700 per return.
Nevadans who filed for the state and local sales tax deduction claimed only $1,430 per return.
Calculated on a per capita basis, Californians claimed $2,116 in federal income tax deductions, while Nevadans claimed only $166 per person for sales tax deductions.
Tax fairness? Not hardly.
Sounds like Nevadans would again be paying a disproportionately higher proportion of federal taxes if the SALT cap is repealed. — TM