Monday, July 8, 2019
David Cay Johnston, How To Fix A Big Problem With The Trump-Radical Republican Tax Law:
Five Questions Congress Needs to Ask About the Impact of the Lopsided Rewrite of the Tax Code
The American people got a highly misleading June 24 report from Congressional staff about the effect of repealing Donald Trump’s $10,000 limit on state and local tax deductions, known as SALT.
Millionaires and billionaires get most of the benefits if the limitation is repealed, the Congressional Joint Committee on Taxation reported [Background On The Itemized Deduction For State And Local Taxes].
The tax committee staff report showed that households reporting incomes of $1 million or more this year would get almost a third of the tax savings if the $10,000 limit is repealed. That’s not surprising in a nation where some people earn multi-billion-dollar annual incomes and hundreds of people report making more than $100 million per year. ...
The tax committee analysis, released last week, was flawed in several ways. That’s no slight on the committee staff, who are serious experts on tax policy. The committee staff responds to questions from lawmakers and in this case, the questions asked were too narrow. The tax committee staff was simply asked the wrong question. We think members of Congress should ask for a new study, asking the five questions below. ...
- Who would benefit from the repeal of the SALT limit under the rules in effect prior to 2018, when more than 42 million taxpayers itemized deductions?
- What happens if the SALT deduction maximum was set at higher levels? For example, what is the deduction was limited to $20,000 or $30,000 or $50,000?
- What about denying SALT deductions to the half million or so taxpayers who report income of $1 million or more? $2 million or more?
- How does the SALT limit affect charitable giving?
- How does the SALT deduction limit interact with home mortgage interest deductions?