Trump SALT cap veto threat doesn't deter Democrats
Increased levy on the rich in the highest tax bracket would offset losses
The House of Representatives passed a bill to overturn the $10,000 cap on state and local tax deductions, despite President Trump's threat to veto it.
Lawmakers took up the bill Thursday afternoon, where it was expected to pass the Democrat-controlled chamber.
However, according to a memo circulated by the administration on Wednesday, if the bill makes it to the president’s desk his advisers would recommend that he veto it on the basis that it would unfairly require middle-class Americans to “subsidize fiscally irresponsible states and wealthy taxpayers.”
House Democrats launched their latest effort last week to overturn the cap. The bill would repeal the provision in 2020 and 2021, while allowing the cap for married couples to double to $20,000 in 2019, which was previously reported by FOX Business
The changes would be paid for by raising the top income tax rate on the wealthiest individuals to 39.6 percent, from 37 percent, which would restore it to pre-Tax Cuts and Jobs Act levels. Further, it would lower the income threshold for people who would be exposed to the top rate. Both of those changes would stay in effect through 2025.
Many provisions of the Tax Cuts and Jobs Act — including the SALT cap — are scheduled to sunset, or expire, in 2025. Part of the Tax Cuts 2.0 push being pursued by Republicans, however, aims to make some of the measures permanent.
The legislation would raise an estimated $6.2 billion, according to an analysis released by the Joint Committee on Taxation.
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According to one of the bill’s sponsors, New Jersey Rep. Bill Pascrell, at least 47 House lawmakers have already signed onto the bill as co-sponsors. Pascrell called the SALT cap a "punch in the gut" to communities across the U.S.
High-tax states have sued to have the SALT cap overturned, which has so far wrought no return. A judge dismissed a lawsuit filed by New York, New Jersey, Connecticut and Maryland earlier this year. The four states filed a notice of appeal late last month.
New York Attorney General Letitia James said the cap is expected to cost New York's taxpayers more than $100 billion, as the wealthy flee to lower-tax havens, like Florida. President Trump, for example, is a lifelong New Yorker who recently announced that he changed his domicile to Palm Beach, Florida.
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