President-elect Donald Trump is reportedly open to raising the cap on SALT, a provision of the tax code that overwhelmingly disadvantages wealthy people in blue states.
Prior to the Tax Cuts and Jobs Act signed into law by President Trump in 2017, the SALT deduction allowed taxpayers to itemize their deductions and subtract the amount they paid in state and local taxes (SALT) from their federal taxes. It was recognized.
Prior to 2017, there was no limit to the amount that can be deducted. That meant wealthy people in high-tax states that provided more government services could potentially reduce their federally taxable income by tens of thousands of dollars.
President Trump's bill would allow taxpayers to deduct up to $10,000 worth of property, sales and income taxes paid to state and local governments.
This was a seismic shift for many, and Democrats at the time saw it as Trump's retaliation against people in blue states who didn't vote for him in the 2016 election.
Before President Trump's tax reform, 91 percent of the benefits of the SALT deduction were claimed by California, New York, New Jersey, Illinois, Texas, and Pennsylvania. tax foundation.
But now, after a recent meeting with House Republicans from New York, California and New Jersey, President Trump is said to be willing to raise the cap from $10,000. Trump won by large margins in all three states in the 2024 election.
Rep. Mike Lawler of New York, who attended Saturday's rally at Mar-a-Lago in Palm Beach, Florida, said President Trump is “fully supportive of raising the cap.”
President-elect Donald Trump is reportedly open to raising salt limits after meeting Saturday at the Mar-a-Lago resort. His administration may support a hike to $20,000.
Republican Representatives Mike Lawler and Nicole Malliotakis, both of New York, attended the meeting and said President Trump is in favor of either “increasing” the cap or eliminating it.
said Congresswoman Nicole Malliotakis, also from New York. new york post President Trump has said he wants to “abolish'' the SALT cap.
“We understand the plight of New Yorkers who are being abused by a mayor and governor who treat New Yorkers like ATMs, and we want to provide SALT relief,” Malliotakis said in a statement. “We need to figure out what those numbers are.”
What the president-elect is not accepting is eliminating the cap entirely, according to reports.
Bloomberg reported that President Trump's economic advisers have discussed expanding the cap to $20,000.
The obvious reason President Trump opposes lifting the cap is that his administration wants more tax cuts that would have to be offset.
Among the tax cuts President Trump discussed during his campaign were eliminating income taxes on tips, Social Security benefits and overtime pay.
Repealing the SALT cap is unpopular with some conservative Republicans in low-tax states, who also argue that it unfairly benefits taxpayers in Democratic states.
“Why should the people of South Carolina have to subsidize the tax system in California and New York? I'm going to have a hard time with this,” said South Carolina Republican Sen. Lindsey Graham said on Fox Business last week.
Republican Sen. Lindsey Graham of South Carolina doesn't support raising salt limits, but many Republicans elected in blue states disagree with him on this point.
Lawler fired back at Graham, speaking out on his own show. fox news He said South Carolina is “one of the states that receives the most percentage of federal funding compared to other states.”
Trump will be inaugurated on January 20th in a very close House of Representatives, with Republicans holding 219 seats and Democrats holding 215 seats.
With the addition of two members of Congress to the incoming Trump administration, this approval rating will soon drop to 217-215.
This means that if he wants to pass another large tax cut, he will have to continue negotiating with Republicans who almost certainly support raising the SALT cap.
Over the past four years, Democrats have made several attempts to eliminate or increase the SALT cap.
Their first attempt came in 2021 when the House passed the Build Back Better plan. The bill would have raised the cap to $80,000 until 2031, but it died in the Senate.
A group of blue states, including New York, Connecticut, Maryland, and New Jersey, also filed legal challenges to the SALT cap in President Trump's tax bill.
The states argued that this cap unfairly infringed on their ability to tax.
In April 2022, the Supreme Court refused to hear the case and did not give a reason.
