A handful of Democrats want to hold up a $2 trillion infrastructure bill to save a choice tax deduction for the wealthy, not that you'll hear it described that way
I spent 30 years as a tax professional at the top of my profession. The SALT deduction should not be reinstated, it’s terrible tax policy. It was passed to put pressure on states who’s fiscal house was in ruin, to force fiscal responsibility on those who’s spending was out of control. Too many times this is portrayed as a political matter, blue vs. red. But that’s a false narrative. States who rely on the wealthy to fund their largess have a spending problem, not a revenue problem. Reduced spending, reduce your tax rate, eliminate useless overhead from school boards and get your pension obligations under control. Then perhaps people will want to immigrate to your state and lift up all boats in the water.
Truly astonishing. Democrats have for as long as I can remember argued, correctly in my opinion, that people (especially the rich) should pay more in taxes. So here we are, paying more taxes (myself included!) and now its the Democratic party arguing the rich are taxed too much. When I say that I'm not quite sure what the Democrats stand for any longer, this SALT deduction brew-ha-ha is one of the big reasons why.
I really get tired of all this “wealthy”, “1%”, “the rich” and all that crap. How have we all forgotten that envy is a mortal sin?
Half the people in this country pay zero tax or have a negative tax via refundable tax credits that is welfare in another name.
Yet I DO agree that the SALT deduction should NOT be reinstated. And while I pay a shit ton of non resident tax to NY even though I live in Florida, I still feel that way.
Big blue states are profligate spenders. They pay off unions with unaffordable contracts that burden their budgets in exchange for political support. In NYC, 16 generations of dads in a cops family could have died of heart disease before 40 and still, if today’s cop gets heart disease at 36, it’s presumed to be job related and he gets a full tax free pension and healthcare for the rest of his life.
Teachers who harm children are kept in what are called rubber rooms, read books, magazines and do crossword puzzles all day long for their 6 figure salaries and are almost never fired.
The myriad taxes NY imposes on its citizens that aren’t SALT limited is crazy. A green grocer can’t put his produce outside his own store without a tax on the stand the produce sits on. A tenant in an office building who’s landlord pays real estate taxes based upon the level of rental income (not the value of the property) pays a commercial rent tax on the rent that his landlord pays real estate taxes on.
NYC has a vault tax. Not on safes. But if you own property, you own it to the street line. Technically you can build under the sidewalk as you own it and must keep it safe and clean or be heavily fined. You can’t build under the street (road) without paying the vault tax. But over the years, NYC has widened public streets taking away sidewalk. One day you find yourself owing the vault tax just due to eminent domain! There are tons of other silly taxes.
And hidden taxes too. You want to cross the Hudson River? $16 to cross a bridge built 90 years ago and long since paid for many times over. That’s every day if you commute. Trucks? As much as $95 just to drive over a bridge.
Illinois can’t reduce public worker salaries or benefits at all - it’s in their constitution.
They will tax anything that doesn’t move. And all these taxes aren’t enough to pay for their welfare state and intrusive government. So they tax income as much as much as 15% on top of their Federal taxes. And NY? If you earn a decent wage you lose most of your deductions and effectively pay a tax on gross income.
Now thats fine. The voters elected the people who Imposed these taxes and they demand all the free services that have to be paid for. And they should pay it.
The Federal tax rate is determined based upon the sum total of includible income less expenses that are deductible. More deductions allowed = higher tax rate across the country.
Why should Florida or Texas taxpayers subsidize a welfare state in NY or NJ that they reject themselves? Forget about Trump ”sticking it to blue states vindictively”. Let NY and NJ pay for their own sclerotic, expensive systems.
Now I don’t agree with much of what MT wrote about “the rich”. I’m sick of all that envy shit. And it’s not all accurate either. To offset the lost SALT Trump widely expanded the standard deduction. That’s why only 10% claim itemized deductions now. When SALT was allowed, many more claimed IDs.
The way they’ve broken the tax system such that half pay zero and the bottom quarter pay 4%, who the fuck else is going to benefit from ANY allowed deduction?
You want to complain about income disparities? I agree with you. So why did the left open the doors so that China, Korea, India and other countries could steal so many American manufacturing jobs from the delivery bays at Walmart and Amazon? Why always side with manufacturing unions which contributed to the destruction of the US auto and other industries? Why blanket business with crazy regulations such that a puddle of standing water is deemed wetlands that must be protected?
The Uber rich are pretty much concentrated in the left and east coasts and have built their fortunes by killing the middle class. Designed in California it says on your iphone box. But they’re built in China and India. Your Washington State Nikes are made in Vietnam. Facebook, Netflix, Microsoft - all that mammoth wealth is on the left coast. NY? All the lawyers and bankers - mostly left wing Democrats - paper it, lawyer it and finance it all. Where are the hedge funds located? A year ago, I saw Bill Ackman and Carl Icahn on the streets in NYC on the same day and Henry Kravitz a week later. They aren’t based in Idaho, North Carolina or a Georgia.
The left killed the middle class and it was no accident. They want dependent people who will vote for them, just like the drug pusher gives out free samples to hook his customers. They refuse to improve their education systems, to curb crime and keep their streets clean. They want it this way, with angry people who don’t get enough free shit while they live amongst the techies, financiers and lawyers who sent their jobs away.
So, fix the middle class by making it easier to do business here. Tariff countries who use their poverty as a trade weapon and have no concern for the environment - stop flagellating ourselves as we are well ahead of all other large countries in reducing carbon.
Amd stop with the class warfare - when a small group pays all the tax, they get most of the benefit of ANY tax relief.
And while we are at it - this $2 trillion bill being held up by east coast SALT warriors isn’t a stimulus. Most of it is little more then long desired left wing handouts. Whatever hold that up, if you ask me,is to be commended.
Just from a moral standpoint, SALT rubs me the wrong way. It's a way to increase local taxes without actually paying those taxes.
But to see the Democrats holding the bill hostage for it isn't a surprise at all. They're quite happy to have the rich keep getting richer. In fact, they made it illegal to compete with many of them!
Living in CT I have found it highly amusing how incensed rich liberals have been over this issue. After years of bleating about the Republicans “tax cuts for the rich” when it hits them they squeal like pigs. Rich white liberals are phonies.
I wasn't happy about losing most of my Cali state tax deduction, but I recognized that Trump was taking a shot at the high-tax blue states, so I hoped it might put some pressure on these one-party creeping(?) socialists to reassess their greedy, power-mad quest for wealth confiscation. That hope was in vain, of course, so I wouldn't mind getting that money back. However, I've adjusted to the new reality, so I'm not sweating bullets.
I know both parties play games with the tax code, but the Democrats in particular are extremely adept at using tax law and regulation to power a money-laundering operation in which campaign money flows back from the rich. Unions are another great source of Democrat revenue, which is why unreal pension benefits have been granted in red states and the federal government.
Great piece as always. As a democrat who would benefit from increasing the SALT cap, I personally think we should eliminate SALT entirely. This deduction only benefits high earners and all of us should be paying more in taxes. Further, increasing SALT cap sends the wrong message for what democrats are pushing for.
Has anybody noticed that Democrats are arrogant preppy elites and Republicans are working people? I guess people have switched parties. The only thing in common is the ones getting rich from China.....Pelosi’s hedge fund hubby, Mitch McConnell’s shipping magnate wife, and Hunter Biden, playboy influence peddler.
I'm angry about the SALT cap and I don't care if that makes me a hypocrite. Why should I be discriminated against vs someone living in Texas? I pay more taxes here in California than my colleagues in London on the same pay package, but here I get nothing for it. Make corporates and the private equity moguls pay their fair share before you keep soaking me for more money.
Two things: 1) My congresswoman is Mikie Sherrill, i.e. Rebecca Michelle Sherrill, not Mike Sherrill. 2) Very few people understand the SALT deduction. First of all, it's not a credit. It's a deduction, which means that in theory a $60,000 deduction would save 37% of that amount in federal taxes, depending on your bracket. But wait, there's more. There is an alternate minimum tax imposed on most deductions, including the SALT and this AMT tax is 28%. This means that for most people a $60,000 is worth no more than $5400 in tax savings, not $22000. The main reason to restore the SALT deduction is to encourage people to stay in high tax states rather than move to states with lower taxes. When I was in Florida this winter, it stunned me that there's no income tax, real estates taxes are reasonable and the services are in many ways better. The roads are maintained and the streets are clean. Despite reports to the contrary, public schools in Florida are actually pretty good.
Great write up, Matt. This highlights two enduring aspects of the political class and our conundrum as a nation. First, both parties are hypocritical to a fault, driven by the demands of the few who can financially support their chosen politician. Second, the tax laws are now so convoluted and complicated that they can indeed be written to target specific individuals, zip codes or organizations. Your government is tying you down - freedom is slipping.
SALT, State and local tax deductions limited amount of state and local taxes (SALT) that could be deducted on a federal income tax to $10,000 which seems a very large amount to most people. It prob. encouraged people to buy expensive houses. Real estate people do not like it.
Yooo any chance this is from what I put in "Which topics need more coverage?" If so I'm feeling like a big boi and if not please don't tell cause I like feeling like a big dawg
Dear Matt, anytime you feel inundated by the naysayers over the Substack news model, please pin a copy of THIS article on your cork board just to remind yourself of the freedom that the Substack arrangement *does afford writers such as yourself. Can you (or I ) imagine *any Liberal or even Conservative paper out there *allowing this kind of "pants on fire" expose of the wealthy kinds of self-dealing manipulation and B.S. employed by literally *ALL the "Champions of the Little Guy" that we purportedly have in Congress ? Thank you for having both the courage and the willingness to do what you *DO !
I spent 30 years as a tax professional at the top of my profession. The SALT deduction should not be reinstated, it’s terrible tax policy. It was passed to put pressure on states who’s fiscal house was in ruin, to force fiscal responsibility on those who’s spending was out of control. Too many times this is portrayed as a political matter, blue vs. red. But that’s a false narrative. States who rely on the wealthy to fund their largess have a spending problem, not a revenue problem. Reduced spending, reduce your tax rate, eliminate useless overhead from school boards and get your pension obligations under control. Then perhaps people will want to immigrate to your state and lift up all boats in the water.
Truly astonishing. Democrats have for as long as I can remember argued, correctly in my opinion, that people (especially the rich) should pay more in taxes. So here we are, paying more taxes (myself included!) and now its the Democratic party arguing the rich are taxed too much. When I say that I'm not quite sure what the Democrats stand for any longer, this SALT deduction brew-ha-ha is one of the big reasons why.
I really get tired of all this “wealthy”, “1%”, “the rich” and all that crap. How have we all forgotten that envy is a mortal sin?
Half the people in this country pay zero tax or have a negative tax via refundable tax credits that is welfare in another name.
Yet I DO agree that the SALT deduction should NOT be reinstated. And while I pay a shit ton of non resident tax to NY even though I live in Florida, I still feel that way.
Big blue states are profligate spenders. They pay off unions with unaffordable contracts that burden their budgets in exchange for political support. In NYC, 16 generations of dads in a cops family could have died of heart disease before 40 and still, if today’s cop gets heart disease at 36, it’s presumed to be job related and he gets a full tax free pension and healthcare for the rest of his life.
Teachers who harm children are kept in what are called rubber rooms, read books, magazines and do crossword puzzles all day long for their 6 figure salaries and are almost never fired.
The myriad taxes NY imposes on its citizens that aren’t SALT limited is crazy. A green grocer can’t put his produce outside his own store without a tax on the stand the produce sits on. A tenant in an office building who’s landlord pays real estate taxes based upon the level of rental income (not the value of the property) pays a commercial rent tax on the rent that his landlord pays real estate taxes on.
NYC has a vault tax. Not on safes. But if you own property, you own it to the street line. Technically you can build under the sidewalk as you own it and must keep it safe and clean or be heavily fined. You can’t build under the street (road) without paying the vault tax. But over the years, NYC has widened public streets taking away sidewalk. One day you find yourself owing the vault tax just due to eminent domain! There are tons of other silly taxes.
And hidden taxes too. You want to cross the Hudson River? $16 to cross a bridge built 90 years ago and long since paid for many times over. That’s every day if you commute. Trucks? As much as $95 just to drive over a bridge.
Illinois can’t reduce public worker salaries or benefits at all - it’s in their constitution.
They will tax anything that doesn’t move. And all these taxes aren’t enough to pay for their welfare state and intrusive government. So they tax income as much as much as 15% on top of their Federal taxes. And NY? If you earn a decent wage you lose most of your deductions and effectively pay a tax on gross income.
Now thats fine. The voters elected the people who Imposed these taxes and they demand all the free services that have to be paid for. And they should pay it.
The Federal tax rate is determined based upon the sum total of includible income less expenses that are deductible. More deductions allowed = higher tax rate across the country.
Why should Florida or Texas taxpayers subsidize a welfare state in NY or NJ that they reject themselves? Forget about Trump ”sticking it to blue states vindictively”. Let NY and NJ pay for their own sclerotic, expensive systems.
Now I don’t agree with much of what MT wrote about “the rich”. I’m sick of all that envy shit. And it’s not all accurate either. To offset the lost SALT Trump widely expanded the standard deduction. That’s why only 10% claim itemized deductions now. When SALT was allowed, many more claimed IDs.
The way they’ve broken the tax system such that half pay zero and the bottom quarter pay 4%, who the fuck else is going to benefit from ANY allowed deduction?
You want to complain about income disparities? I agree with you. So why did the left open the doors so that China, Korea, India and other countries could steal so many American manufacturing jobs from the delivery bays at Walmart and Amazon? Why always side with manufacturing unions which contributed to the destruction of the US auto and other industries? Why blanket business with crazy regulations such that a puddle of standing water is deemed wetlands that must be protected?
The Uber rich are pretty much concentrated in the left and east coasts and have built their fortunes by killing the middle class. Designed in California it says on your iphone box. But they’re built in China and India. Your Washington State Nikes are made in Vietnam. Facebook, Netflix, Microsoft - all that mammoth wealth is on the left coast. NY? All the lawyers and bankers - mostly left wing Democrats - paper it, lawyer it and finance it all. Where are the hedge funds located? A year ago, I saw Bill Ackman and Carl Icahn on the streets in NYC on the same day and Henry Kravitz a week later. They aren’t based in Idaho, North Carolina or a Georgia.
The left killed the middle class and it was no accident. They want dependent people who will vote for them, just like the drug pusher gives out free samples to hook his customers. They refuse to improve their education systems, to curb crime and keep their streets clean. They want it this way, with angry people who don’t get enough free shit while they live amongst the techies, financiers and lawyers who sent their jobs away.
So, fix the middle class by making it easier to do business here. Tariff countries who use their poverty as a trade weapon and have no concern for the environment - stop flagellating ourselves as we are well ahead of all other large countries in reducing carbon.
Amd stop with the class warfare - when a small group pays all the tax, they get most of the benefit of ANY tax relief.
And while we are at it - this $2 trillion bill being held up by east coast SALT warriors isn’t a stimulus. Most of it is little more then long desired left wing handouts. Whatever hold that up, if you ask me,is to be commended.
Just from a moral standpoint, SALT rubs me the wrong way. It's a way to increase local taxes without actually paying those taxes.
But to see the Democrats holding the bill hostage for it isn't a surprise at all. They're quite happy to have the rich keep getting richer. In fact, they made it illegal to compete with many of them!
Living in CT I have found it highly amusing how incensed rich liberals have been over this issue. After years of bleating about the Republicans “tax cuts for the rich” when it hits them they squeal like pigs. Rich white liberals are phonies.
I wasn't happy about losing most of my Cali state tax deduction, but I recognized that Trump was taking a shot at the high-tax blue states, so I hoped it might put some pressure on these one-party creeping(?) socialists to reassess their greedy, power-mad quest for wealth confiscation. That hope was in vain, of course, so I wouldn't mind getting that money back. However, I've adjusted to the new reality, so I'm not sweating bullets.
I know both parties play games with the tax code, but the Democrats in particular are extremely adept at using tax law and regulation to power a money-laundering operation in which campaign money flows back from the rich. Unions are another great source of Democrat revenue, which is why unreal pension benefits have been granted in red states and the federal government.
Great piece as always. As a democrat who would benefit from increasing the SALT cap, I personally think we should eliminate SALT entirely. This deduction only benefits high earners and all of us should be paying more in taxes. Further, increasing SALT cap sends the wrong message for what democrats are pushing for.
Here's my go to resources for quantifying just who benefits from SALT and illustrating just how regressive this deduction is, https://taxfoundation.org/salt-deduction-salt-cap-repeal/
Has anybody noticed that Democrats are arrogant preppy elites and Republicans are working people? I guess people have switched parties. The only thing in common is the ones getting rich from China.....Pelosi’s hedge fund hubby, Mitch McConnell’s shipping magnate wife, and Hunter Biden, playboy influence peddler.
I'm angry about the SALT cap and I don't care if that makes me a hypocrite. Why should I be discriminated against vs someone living in Texas? I pay more taxes here in California than my colleagues in London on the same pay package, but here I get nothing for it. Make corporates and the private equity moguls pay their fair share before you keep soaking me for more money.
Two things: 1) My congresswoman is Mikie Sherrill, i.e. Rebecca Michelle Sherrill, not Mike Sherrill. 2) Very few people understand the SALT deduction. First of all, it's not a credit. It's a deduction, which means that in theory a $60,000 deduction would save 37% of that amount in federal taxes, depending on your bracket. But wait, there's more. There is an alternate minimum tax imposed on most deductions, including the SALT and this AMT tax is 28%. This means that for most people a $60,000 is worth no more than $5400 in tax savings, not $22000. The main reason to restore the SALT deduction is to encourage people to stay in high tax states rather than move to states with lower taxes. When I was in Florida this winter, it stunned me that there's no income tax, real estates taxes are reasonable and the services are in many ways better. The roads are maintained and the streets are clean. Despite reports to the contrary, public schools in Florida are actually pretty good.
While I won’t benefit I hope they repeal the cap. Maybe some of our new neighbors will move back to the states they ran away from. We can hope....
Also, since deficits are nothing to get worked up about, why do we have taxes?
Great write up, Matt. This highlights two enduring aspects of the political class and our conundrum as a nation. First, both parties are hypocritical to a fault, driven by the demands of the few who can financially support their chosen politician. Second, the tax laws are now so convoluted and complicated that they can indeed be written to target specific individuals, zip codes or organizations. Your government is tying you down - freedom is slipping.
SALT, State and local tax deductions limited amount of state and local taxes (SALT) that could be deducted on a federal income tax to $10,000 which seems a very large amount to most people. It prob. encouraged people to buy expensive houses. Real estate people do not like it.
Yooo any chance this is from what I put in "Which topics need more coverage?" If so I'm feeling like a big boi and if not please don't tell cause I like feeling like a big dawg
Dear Matt, anytime you feel inundated by the naysayers over the Substack news model, please pin a copy of THIS article on your cork board just to remind yourself of the freedom that the Substack arrangement *does afford writers such as yourself. Can you (or I ) imagine *any Liberal or even Conservative paper out there *allowing this kind of "pants on fire" expose of the wealthy kinds of self-dealing manipulation and B.S. employed by literally *ALL the "Champions of the Little Guy" that we purportedly have in Congress ? Thank you for having both the courage and the willingness to do what you *DO !
“mainstream publications rarely use words like 'lie' in conjunction with Democrats, and never phrases like 'open political whoring.' ”
Milk out my nose. Well played, Matt.