If you’re one of the more than 100 million working people who deduct state and local income taxes (SALT) from your federal taxes, you may be in for a nasty surprise.
House of Representatives leaders are finalizing their tax bill and are looking to eliminate this important deduction in order to pay for tax cuts for the wealthy and profitable corporations. Even more unfair is that while the deduction would disappear for working families, corporations would still get to claim it.
The so-called SALT deduction has been around since the inception of the federal income tax. It prevents middle-class taxpayers from paying taxes twice on the same dollar earned – first to state or local governments and again to the federal government.
According to the Center on Budget and Policy Priorities (CBPP), “Trading SALT deduction for high-income tax cuts is a bad deal for most Americans.”
Getting rid of this deduction would not only takes money out of working families’ wallets and gives it to the wealthy, it would also strain state and local budgets and force local governments to cut vital public services.
As the CBPP report explains, the elimination of the SALT deduction “comes as the president and congressional Republicans propose in their 10-year budget plans to shift substantial new costs to states.”
And how would they do this? “By sharply cutting Medicaid and other health funding and potentially cutting federal support for state and local services such as education, transportation, environmental protection and low-income housing,” CBPP says.
Eliminating the SALT deduction is not the only harmful provision that’s likely to be included in the House bill. AFSCME is monitoring the emerging legislation to spot other things that will hurt working families.