Campaign Launched to Protect State and Local Tax Deduction

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Posted: Tuesday, September 26, 2017 7:16 pm | Updated: 7:21 pm, Tue Sep 26, 2017.

WASHINGTON, D.C. -- Americans Against Double Taxation, a coalition comprised of state and local government organizations, education and other public service providers, and housing organizations, has come together to launch a robust campaign to preserve the state and local tax deduction in any comprehensive tax reform proposal. The coalition, which successfully preserved SALT in the tax reform package signed by President Ronald Reagan in 1986, sent a letter to the leadership of the House Ways and Means Committee and the Senate Finance Committee to urge them to ensure that Americans can continue claiming this vital deduction.

One of the six original federal tax deductions, SALT has been a staple of the federal tax code for more than 100 years. Since 1913, SALT has helped support vital investments in infrastructure, public safety, homeownership, and education, and provided states and local governments with the financial flexibility to meet the needs of their constituents. SALT also prevents double taxation of Americans by allowing taxpayers to claim a deduction for the state and local taxes they have already paid from their incomes.

"We strongly believe that no federal law or regulation should preempt, limit or interfere with the constitutional or statutory rights of states and local governments to develop and operate their own tax systems to the benefit of their constituents," the coalition wrote. "States and local governments deploy revenues from state and local property, sales and income taxes to finance long term infrastructure projects, local law enforcement, schools, emergency and many other services. By eliminating the federal deductibility of these taxes, Congress would be shifting the intergovernmental balance of income taxation and could limit state and local control of tax systems."

More than 43 million American taxpayers claim the SALT deduction, making it the most popular deduction in the federal tax code.

  • SALT benefits the middle class. Nearly 87 percent of taxpayers who claim the SALT deduction have an adjusted gross income under $200,000.
  • Taxpayers in all 50 states, in both Democratic and Republican congressional districts, claim SALT. Of the top 20 highest-SALT congressional districts, 45 percent have Republican representatives.
  • If Congress eliminates SALT, middle class homeowners will see their taxes increase. Homeowners that make between $50,000 and $200,000 would see an average tax increase of $815, even if standard deduction is doubled.

SOURCE: National League of Cities

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