To make their tax plan work, Republicans eye a favorite blue-state break

[Yo_Mama_Been_Loggin]

As long as there has been a federal income tax, taxpayers have been able to deduct most of the state and local taxes they pay from earnings subject to Uncle Sam’s grasp. But that deduction — especially popular in states rich in Democratic voters — could disappear as soon as next year if President Trump and congressional Republicans succeed in their promised rewrite of the tax code.

The state and local tax deduction, or SALT, has long been a target for tax-policy wonks who see it as an unwise federal subsidy that is mainly claimed by the wealthy. But politics have always intervened: Thanks to the opposition of lawmakers in high-tax states, the deduction has survived every effort to clear out loopholes, including the last federal tax overhaul of similar ambition in 1986.

Now, Republican leaders have made clear the SALT deduction is on the table, and it has shaken upa number of blue-state GOP legislators who are warning that it could derail the ambitious tax plan Trump is now pushing. 

“I intend to fight it with everything I know how,” said Rep. Tom MacArthur (R-N.J.), who represents a district where 43 percent of tax filers claim SALT deductions and signed a bipartisan letter to Treasury Secretary Steven Mnuchin urging him to preserve the break. “It’s a big deal for states like ours.”

http://www.msn.com/en-us/news/politics/to-make-their-tax-plan-work-republicans-eye-a-favorite-blue-state-break/ar-AAs15fs?li=BBmkt5R&ocid=spartandhp

[jmowreader]

1. This is something Reagan did too

To make his rate cuts work, Reagan eliminated several tax breaks beloved by the middle class. Before Reagan, non-mortgage interest was deductible and Social Security wasn't taxable. Saint Ronnie got rid of that shit quick.

[Igel]

2. None of the middle-class folk I know care about the federal state-tax deductions.

Then again, we live in the second largest state in the US and pay no state income tax, so it's completely irrelevant to us.

There was talk or maybe there briefly was a way to give people in such state a substitute deduction to compensate.

Before Reagan a lot of things were deductible. The mantra was "reduce rates but close loopholes." Non-mortgage interest was a loophole. Many wailed when it went away. At the time, any contribution to a non-profit was also deductible--donate $20 to some group or a religious NGO and you could deduct it. That, too, was a loophole.

The deduction for non-profits was viewed as a religious subsidy. The deduction for interest wasn't viewed as a subsidy. Home mortgage interest deductions are viewed as a subsidy. But the state tax exemption isn't. I personally don't view non-taxation as subsidization. It still strikes me as a bit unfair.

Just think of the increased federal revenues from eliminating that deduction. It would have to help reduce the deficit.

Anyway, removal of income tax averaging hit just as my income increased. So I couldn't average.

SS benefits became partially taxable as the result of a House bill introduced by Dan Rostenkowski. The '86 tax reform was also introduced by him. (D). The House was majority (D) for the SS amendments and the two tax reform measures in '84 and '86.