Comment by lotsofpulp | Hacker News Reader

Comment by lotsofpulp | Hacker News Reader

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Because SALT deduction benefits only go to the top 5% to 10% income households.

Democrats do not really have a leg to stand on if they want to push progressive taxes. With the standard deduction at $13k/$25k, only the richest households in the solid Democrat states are affected by SALT deduction caps, and there is no reason for politicians not from those states to compromise on it.

Even the politicians from the high tax states have a tough time answering why they are holding up legislation to benefit the highest 10% of incomes of the state.

It was a pretty genius political move by Republicans.

Edit:

> There's no shortage of similar examples, from immigration policy to idiotic "easy to win" trade wars to USPS governance, where Trump policies have survived so long that it's hard to believe that the Democrats don't agree with them.

Also, a lot of these things require Senate approval which Dems do not have. When Trump was in office, all the Repubs were lockstep behind him, so he could push through a ton of stuff. Dems have not had this position since the Clinton days in the 90s.

Because SALT deduction benefits only go to the top 5% to 10% income households.

That's not a reason. Double taxation of individuals is not OK.

I do not see how it is “double taxation”. The whole setup of the US is that there are multiple taxing authorities, and they can all lay claim to a portion of one’s income.

There is no law that says two different governments each cannot collect x% of your income.

What reason there is for one to need to be able to reduce amounts owed to entity A simply because they also owe entity B?

Entity A and B can be a retail store, grocery store, plumber, government, whoever.

It's double taxation if two entirely-different entities lay claim to a percentage of pretax income. The same income is being taxed twice. To my thinking, it comes down to the basic division of responsibilities between the Federal, state, and local governments. Simply adding another layer should not require additional tax funding; the question should only be how the income tax an individual pays is distributed between the layers.

Fortunately, that's one advantage to the system we have -- if you don't feel that Sacramento and Washington, DC should both get a crack at your income, you can always move to a state with no income tax. I did.

Not so much. Average house in Illinois about 350k. At that you pay about 10k property tax. Salt limit reached.

You have to forego the standard deduction if you want to itemize And take advantage of SALT deductions. Which means you have to owe more federal income tax than $12.5k for single filers and $25.1k for married filers.

This link goes into more detail:

https://www.pgpf.org/blog/2021/07/what-is-the-salt-cap-and-w...

Yeah, but that was just the property tax — the SALT cap applies to the total state and local taxes.

Tack on the 5% income tax rate, and you'll hit the cap pretty easily. For example, a single person making any amount (with that property tax amount) will hit the cap. Ditto for a couple each making $145k.

And they still have $10k of SALT to deduct. The more you increase the cap, the more it benefits richer people (on a nationwide perspective).

There are a handful of states with extremely high taxes (IL/NJ/CT/CA/NY/MD/etc), but they are solidly Democrat. I do not envision the other Democrat states who would not benefit from SALT cap increases to care about going out on a limb for them.

I'm no expert, but I would imagine this would be part of a larger package that would have plenty of goodies for other D-leaning states. You don't have to convince folks in Louisiana that SALT cap removal is in their best interest — you just package it up in a bill large enough to get a big enough coalition of supporters.

Which is what Dems tried with the Build Back Better bill, but Repubs were able to successfully pit Democrat vs Democrat because increasing the SALT caps is easy to advertise as decreasing taxes for the rich.

This is a great article summarizing what I am trying to say.

https://thehill.com/homenews/senate/591378-salt-change-likel...

> Critics grumble that raising the cap on SALT deductions runs counter to what they say is the main political rationale for passing the legislation: addressing wealth inequality.

Repubs really put Dems in a bad spot with this one.

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