House Votes Today on Federal Budget Plan that Eliminates Local Tax Deduction

The National Association of Counties issues a call to action to ask Representatives to remove state and local tax deduction provision from budget plan.

From CNN,

The House of Representatives votes Thursday on a budget resolution that would allow Congress to fast-track a tax reform bill, a major legislative effort that Republicans are desperate to launch.

But frustration over a proposal to eliminate a popular tax deduction has some Republicans threatening to rally together and vote with Democrats in opposition to the budget.

The current tax reform framework calls for nixing the State and Local Tax deduction (SALT), a tax break used by nearly one-third of filers. Cutting the deduction would help Republicans raise more than a trillion dollars to help pay for tax cuts over 10 years, making it a huge source of revenue for their overall plan to reform the tax code.

But Republicans from states like New York, New Jersey, Illinois and California argue that their constituents rely on the deduction. While some are open to making changes to SALT — such as capping the income level at which taxpayers could use it — others don’t favor any kind of compromise and want tax writers to leave SALT completely alone.
“My solution is to take it off the table,” said Republican Rep. Leonard Lance of New Jersey.

According to the National Association of Counties, eliminating the state and local tax (SALT) deduction  makes local governments and home owners a major “pay for” in the forthcoming tax reform plan.

NACo has issued a call to action for county elected officials to preserve the State and Local Tax Deduction.

Maryland is among the most heavily affected states – with the highest share of taxpayers claiming the deduction. Analyses show that more than $1.3 million Maryland tax returns include the SALT deduction. Many middle-income Marylanders would feel a substantial tax increase under a plan that includes eliminating the SALT deduction.

From Jack Peterson, NACo Associate Legislative Director:

The vote on the House Resolution is expected to be very close because of the bad language on SALT—and a group of Republican lawmakers fighting to preserve SALT. In the next 24 hours, we ask that you to call your member of Congress and urge them to vote NO on the House Budget Resolution in order to FULLY PROTECT SALT.

You may use the following talking points when calling your member of Congress. To reach your lawmaker, dial (202) 224-3131 and ask to be connected to your member’s office.

KEY MESSAGES

I’m calling today to urge you to vote NO on the upcoming House Budget Resolution because the resolution explicitly targets the state and local tax deduction (SALT) as the major “pay for” in the upcoming tax reform fight.

  • By eliminating SALT, Congress would double tax residents on their income, shifting $1.3 trillion away from local communities and to the federal government. Furthermore, the Budget resolution sets a Double Standard because corporations would be able to continue fully deducting their state and local taxes, but individuals and families in our district could not.
  • Eliminating SALT hits home owners particularly hard – their taxes will go up while home values will go down. That is wrong and we need you to stand up for homeowners and other taxpayers in your Congressional District by voting NO on the budget resolution until there are assurances that SALT will be fully preserved.
  • Any change to SALT would harm vital services and infrastructure investments provided by state and local governments. Compromise proposals will not cover every resident in our district and state, and it will create a slippery slope that allows Congress to chip away at SALT in the future.

NACo is not asking lawmakers to vote ‘no’ on tax reform. NACo’s advocacy asks that Congress protects state and local control, local revenues, and local taxpayers as they move forward with budget discussions, and take the SALT deduction off the table.

You can view your county SALT profile from NACo here, and check out a zip-code calculator to determine impact on home owners in your zip code here.

For more information, feel free to reach out directly to Jack Peterson on NACo staff with any questions or responses you receive: jpeterson@naco.org.