file photo by Boyd Loving
the staff of the Ridgewood blog
Ridgewood NJ, President-elect Donald Trump’s campaign promise to repeal the controversial $10,000 cap on state and local property tax (SALT) deductions may take a different turn. According to recent reports, Trump’s advisers are exploring an alternative plan: raising the cap to $20,000 instead of eliminating it entirely.
The Background on SALT
The $10,000 SALT deduction cap was introduced as part of Trump’s 2017 Tax Cuts and Jobs Act (TCJA). Critics argued it disproportionately impacted Democratic-leaning states with high property and state income taxes, such as New Jersey, New York, and California.
During his recent campaign, Trump pledged to “get SALT back” and lower taxes, emphasizing the need for tax relief in these states. However, advisers like Stephen Moore, a member of Trump’s economic transition team, suggest a compromise: doubling the cap to $20,000.
Moore’s Perspective
In an interview with Bloomberg, Moore expressed skepticism about fully repealing the cap, citing concerns over fiscal responsibility.
“We hate SALT because it forces taxpayers in low-tax states to subsidize the most reckless, high-tax states,” Moore wrote in his newsletter. “But politics is the art of the possible, and at least five House Republicans in blue states are demanding some relief.”
Moore also noted that doubling the cap could provide significant relief without drastically impacting federal tax revenue.
The Debate Around SALT
The SALT deduction cap has sparked intense debate across the political spectrum:
- Critics of the Deduction: Progressives like Senator Bernie Sanders argue that lifting the cap benefits the wealthy disproportionately. According to the Tax Foundation, most tax relief from removing the SALT cap would go to households earning $200,000 to $500,000.
- Defenders of the Deduction: Proponents say the cap impacts middle-class homeowners in high-tax states. New Jersey’s average SALT deduction in 2016 was over $18,000, with the largest group of filers earning between $100,000 and $200,000 annually.
Congressman Josh Gottheimer (D-NJ) has framed the issue as a middle-class problem, noting that teachers, firefighters, and police officers are among those most affected by the cap.
The Financial Implications
Repealing the SALT cap entirely could cost the federal government nearly $1 trillion in lost revenue, with most of the savings benefiting wealthy taxpayers in high-income brackets. Raising the cap to $20,000, as suggested, could strike a balance by easing the burden on middle-class homeowners while avoiding a massive hit to federal revenue.
What’s Next?
As the Trump administration prepares to take office, the SALT deduction debate will likely remain at the forefront of tax policy discussions. Whether the cap is doubled, repealed, or left unchanged, the outcome could significantly impact taxpayers in high-tax states.
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no comments from the rich white folks ?
you are a racist