As we all know the Trump tax cuts, limited SALT deductions to $10K. My guess is that impacts many of the people on this board but not all. It does not impact me because I am a standard deduction filer. Even if you lift the salt cap, I would still be standard deduction filer. I don’t pay property taxes and state income taxes are less than 5%, I don’t have home interest deduction, nor other significant itemized deductions.
Democrats are in a tizzy about lifting this and if so how much. My personal belief is there should not be a deduction at all for SALT. In fact, I believe that your state taxes should provide a deduction for your federal taxes.
Democrats wanting to lift the cap and maybe phase it out to incomes over a certain level. Is the easy thing not to simply raise the cap from $10K to maybe $20K or $30K? Sure wealthy would get a tiny amount of relief, but this would be more significant to middle class/average person. At the end of the day, you can tell that they are trying to accommodate the wealthy donors that this cap hit the hardest.
I agree with this. Like you, we use the standard deduction. It’s not because we don’t pay SALT, they’re our second largest involuntary expense behind federal income tax. We itemized prior to having to take RMDs (coincidentally, the year the SALT deductions were limited). But, RMDs also brought QCDs, which we use rather than pre-tax donations that would be itemized deductions.
Not answering for Bass.
But IMO, it is to give the States more power.
I personally think the entire taxation system should be written in a way that the States pay the Fed, not the citizens.
That’s the one part of the Trump tax bill I agreed with Republicans on.
I’m not sure there’s much purpose to a phase out. People with low enough incomes to be below a reasonable threshold probably use the standard deduction. Heck, I’m in the top 10% in income and after the 2017 bill, I use the standard. The SALT deduction is for the rich people in high tax states.
Because, I don’t get to vote on your local tax laws, but these local tax laws influence federal tax deductions. Why should you get a discount on your federal tax liability because you vote to have higher taxes? It levels the playing field for federal taxes for all tax payers regardless of place of residency.
Thank you for your reply. I disagree with your take, but I respect your opinion on it.
What do you think of getting rid of SALT deductions entirely and keeping federal, state and local taxes totally independent of each other? I think that is the most equitable way to handle things.
I think getting rid of all itemized deductions is the most equitable. Why should you pay lower taxes because you have a mortgage and a renter next door with the same income?
The states have the ability to apply taxes as the locals deem necessary. The concept of double taxation is complete trash. After I pay income taxes, I pay all kinds of taxes with what is left over.
Again on my soapbox.
Given that my pipe dream will never come true.
It would at least be nice if we went back to looking at taxes as a means of revenue, not a means of behavior modification.
