Trump flip flops on SALT Tax Deduction

[Anonymous]

Anonymous wrote:

Anonymous wrote:As someone who pays more than $10,000 in SALT each year and itemizes deductions, let me join the other people in this thread who would be better off if this policy changed but still recognize that letting people who make more money find additional tax shelters is unfair.

They should leave the cap as it is or ban deduction of state taxes outright, and they should also stop subsidizing my mortgage with that deduction, while they're at it.

The SALT deduction has an income cap.

The deduction itself has a cap. And only people with high incomes pay enough in taxes to need the higher deduction (or to itemize their deductions).

[Anonymous]

Anonymous wrote:I’d MUCH prefer he abandon the SALT than take Medicaid and snap away from those who need it. It will affect us all - hospitals will close, children will go hungry, the sick will get sicker and cost more to treat - and women will be the ones to suffer, caring for the elderly who get kicked out of the nursing homes.

Agreed. But I don't think that's the tradeoff that will occur. Medicaid will be cut, and the question is what happens to the SALT tax vs. how much the tax rate for the Elon Musk level rich will shift.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:As someone who pays more than $10,000 in SALT each year and itemizes deductions, let me join the other people in this thread who would be better off if this policy changed but still recognize that letting people who make more money find additional tax shelters is unfair.

They should leave the cap as it is or ban deduction of state taxes outright, and they should also stop subsidizing my mortgage with that deduction, while they're at it.

The SALT deduction has an income cap.

The deduction itself has a cap. And only people with high incomes pay enough in taxes to need the higher deduction (or to itemize their deductions).

But I make way under 400K and pay high state taxes. People forget RMDs are gigantic many retired people. My math has me at $3 million by retirement in 401k that will be $113,370 in RMDs. By then with inflation I will pay 24k in property taxes and my wife wants to get a little beach condo that might be 6k property tax.

I live in Maryalnd so will have over 40K salt in retirement even though middle class. By 75 when RMDS happen with 50 years compounding nearly everyone in 2030s will have 7 figure 401ks

[Anonymous]

Anonymous wrote:I’d MUCH prefer he abandon the SALT than take Medicaid and snap away from those who need it. It will affect us all - hospitals will close, children will go hungry, the sick will get sicker and cost more to treat - and women will be the ones to suffer, caring for the elderly who get kicked out of the nursing homes.

No. I am tired of paying for poor maga voters in red states. The days of the rich helping out the poor are over. Cut Medicaid, Medicare and snap. F them. Salt takes money out of ICE and DOJ’s pockets. That means they will arrest less democrats elected officials.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I’d MUCH prefer he abandon the SALT than take Medicaid and snap away from those who need it. It will affect us all - hospitals will close, children will go hungry, the sick will get sicker and cost more to treat - and women will be the ones to suffer, caring for the elderly who get kicked out of the nursing homes.

No. I am tired of paying for poor maga voters in red states. The days of the rich helping out the poor are over. Cut Medicaid, Medicare and snap. F them. Salt takes money out of ICE and DOJ’s pockets. That means they will arrest less democrats elected officials.

Have you read the House budget? Massive increase in DHS budget.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:As someone who pays more than $10,000 in SALT each year and itemizes deductions, let me join the other people in this thread who would be better off if this policy changed but still recognize that letting people who make more money find additional tax shelters is unfair.

They should leave the cap as it is or ban deduction of state taxes outright, and they should also stop subsidizing my mortgage with that deduction, while they're at it.

The SALT deduction has an income cap.

The deduction itself has a cap. And only people with high incomes pay enough in taxes to need the higher deduction (or to itemize their deductions).

But I make way under 400K and pay high state taxes. People forget RMDs are gigantic many retired people. My math has me at $3 million by retirement in 401k that will be $113,370 in RMDs. By then with inflation I will pay 24k in property taxes and my wife wants to get a little beach condo that might be 6k property tax.

I live in Maryalnd so will have over 40K salt in retirement even though middle class. By 75 when RMDS happen with 50 years compounding nearly everyone in 2030s will have 7 figure 401ks

You are not MC. Stop.

[Anonymous]

They should just get rid of the cap everyone needs to deduct taxes decut as much as possible

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:As someone who pays more than $10,000 in SALT each year and itemizes deductions, let me join the other people in this thread who would be better off if this policy changed but still recognize that letting people who make more money find additional tax shelters is unfair.

They should leave the cap as it is or ban deduction of state taxes outright, and they should also stop subsidizing my mortgage with that deduction, while they're at it.

The SALT deduction has an income cap.

The deduction itself has a cap. And only people with high incomes pay enough in taxes to need the higher deduction (or to itemize their deductions).

But I make way under 400K and pay high state taxes. People forget RMDs are gigantic many retired people. My math has me at $3 million by retirement in 401k that will be $113,370 in RMDs. By then with inflation I will pay 24k in property taxes and my wife wants to get a little beach condo that might be 6k property tax.

I live in Maryalnd so will have over 40K salt in retirement even though middle class. By 75 when RMDS happen with 50 years compounding nearly everyone in 2030s will have 7 figure 401ks

You should move out of md.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:As someone who pays more than $10,000 in SALT each year and itemizes deductions, let me join the other people in this thread who would be better off if this policy changed but still recognize that letting people who make more money find additional tax shelters is unfair.

They should leave the cap as it is or ban deduction of state taxes outright, and they should also stop subsidizing my mortgage with that deduction, while they're at it.

The SALT deduction has an income cap.

The deduction itself has a cap. And only people with high incomes pay enough in taxes to need the higher deduction (or to itemize their deductions).

But I make way under 400K and pay high state taxes. People forget RMDs are gigantic many retired people. My math has me at $3 million by retirement in 401k that will be $113,370 in RMDs. By then with inflation I will pay 24k in property taxes and my wife wants to get a little beach condo that might be 6k property tax.

I live in Maryalnd so will have over 40K salt in retirement even though middle class. By 75 when RMDS happen with 50 years compounding nearly everyone in 2030s will have 7 figure 401ks

You are not MC. Stop.

Yes they are.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:As someone who pays more than $10,000 in SALT each year and itemizes deductions, let me join the other people in this thread who would be better off if this policy changed but still recognize that letting people who make more money find additional tax shelters is unfair.

They should leave the cap as it is or ban deduction of state taxes outright, and they should also stop subsidizing my mortgage with that deduction, while they're at it.

The SALT deduction has an income cap.

The deduction itself has a cap. And only people with high incomes pay enough in taxes to need the higher deduction (or to itemize their deductions).

But I make way under 400K and pay high state taxes. People forget RMDs are gigantic many retired people. My math has me at $3 million by retirement in 401k that will be $113,370 in RMDs. By then with inflation I will pay 24k in property taxes and my wife wants to get a little beach condo that might be 6k property tax.

I live in Maryalnd so will have over 40K salt in retirement even though middle class. By 75 when RMDS happen with 50 years compounding nearly everyone in 2030s will have 7 figure 401ks

You are not MC. Stop.

Yes they are.

Yes please tell us more about the middle class people who have (even inflated 15 years out) $3 million in a 401k, a house with $24k in property taxes, and a "little beach condo".

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I’d MUCH prefer he abandon the SALT than take Medicaid and snap away from those who need it. It will affect us all - hospitals will close, children will go hungry, the sick will get sicker and cost more to treat - and women will be the ones to suffer, caring for the elderly who get kicked out of the nursing homes.

No. I am tired of paying for poor maga voters in red states. The days of the rich helping out the poor are over. Cut Medicaid, Medicare and snap. F them. Salt takes money out of ICE and DOJ’s pockets. That means they will arrest less democrats elected officials.

Have you read the House budget? Massive increase in DHS budget.

Yes the more money salt takes away from the feds the less they can spend on oppressing their political opposition.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I personally would be better off with a higher SALT limit, all else equal, but it's clearly the right policy to limit or eliminate the deduction.

SALT deductions have been around since the 1860s. Why? Because it was considered Big Government overreach for the federal government to double-tax the states.

The United States’ first income tax was enacted in 1861, and tweaked in 1862. Both versions contained only one deduction; and, you guessed it, it was the SALT deduction! A recently minted political party called the Republican party controlled Congress and a Republican-party President occupied the White House for the first time (a 6’ 4” fellow named Abraham Lincoln). Records of why the SALT deduction was included in the first income tax are scarce, but there are documented statements by Congressional Republicans that may support two justifications. The first was federalism and keeping the Federal tax out of the orbit of State levies. The second was double taxation: preventing the Federal government from taxing a dollar that the States had already taxed. There is no record of political discord over the SALT deduction.

https://www.chamberlainlaw.com/tax-blawg/history-of-the-salt-deduction

Capping SALT deductions in 2017 was the radical policy.

I don't see anything here making a serious policy case for a SALT deduction (and no, "we've done it this way for a century" is not a serious case). The core issue is that SALT amounts to a federal subsidy of state taxes and mortgage interest in proportion to the taxpayer's income, with high income folks receiving a greater subsidy as a percentage and folks in high tax states receiving a higher level of subsidy. This makes no sense! Just eliminate the deduction and lower the rates by a couple percentage points until revenue is equalized.

The states with low/no state income tax are subsidized by wealthier states - ie the ones that tend to have higher state and local taxes. Seems a fair way to offset that.

Not PP, but disagree with this statement. How are states w/higher state income tax, subsidizing those with lower state income tax ? It’s not like the high tax states are sending part of their state budget to the Feds to spend for the benefit of all. Sure, you can say they have higher per capita income, so what, they pay more federal income tax as they should, but has nothing to with the state taxes. They would pay the same Federal tax if they lived in low tax states.

The reality is that states with higher tax rates have chosen to provide more services and better paid civil servants, compared to that of low tax states. They may also be inefficient in providing those services. The SALT deduction is a way to hide this from their citizens. I say let them pay the full freight. And if they don’t like it, move or complain at the voter box.

Here is a revised version with improved grammar, clarity, and flow:

⸻

It is well documented that higher-tax states pay more in federal taxes than they receive in return.

So how do higher-tax states subsidize lower-tax states? The answer lies in the fact that lower-tax states rely more heavily on federal funding to support their budgets.

That’s the essence of the subsidy. Even before the SALT cap change in 2017, high-tax states were still contributing more to the federal government than they received. Increasing the SALT deduction would simply reduce the extent to which high-tax states subsidize low-tax states.

https://wallethub.com/edu/states-most-least-dependent-on-the-federal-government/2700

You are wrong. No state government pays a dime to the Federal government in taxes. Not one. This where this BS logic breaks down.

US citizens with the same income/deductions pay the same Federal tax, regardless of what state they live in. They may pay higher state taxes b/c they CHOOSE to live in a state with higher state tax rates. Hopefully, they feel they are getting something valuable for the higher state taxes. If not, then move to a state with a lower state income tax.

So own your CHOICE, pay your state taxes without Federal subsidy, and quit whining about it.

You can frame it that way but that’s not the reality on the ground.

Low tax states take in more federal dollars than they pay out through its citizens. Hope that helps

It’s framed that way b/c that’s the way it is. There no definition for a state “ taking in” Federal dollars. If the Feds put a military base in a particular state, does this count as “taking in” Federal dollars b/c they spend money to operate the base ? I don’t think so, the state had choice and base benefits the entire country.

[Anonymous]

Anonymous wrote:As someone who pays more than $10,000 in SALT each year and itemizes deductions, let me join the other people in this thread who would be better off if this policy changed but still recognize that letting people who make more money find additional tax shelters is unfair.

They should leave the cap as it is or ban deduction of state taxes outright, and they should also stop subsidizing my mortgage with that deduction, while they're at it.

Agree with this. Deductions should be for activity related to producing income, or encouraging some broad social goal, e.g., family formation. Having relatively high state income taxes satisfies neither of these. So no SALT deduction, period.

[Anonymous]

Anonymous wrote:

Anonymous wrote:As someone who pays more than $10,000 in SALT each year and itemizes deductions, let me join the other people in this thread who would be better off if this policy changed but still recognize that letting people who make more money find additional tax shelters is unfair.

They should leave the cap as it is or ban deduction of state taxes outright, and they should also stop subsidizing my mortgage with that deduction, while they're at it.

Agree with this. Deductions should be for activity related to producing income, or encouraging some broad social goal, e.g., family formation. Having relatively high state income taxes satisfies neither of these. So no SALT deduction, period.

It's as if you paid zero attention to US history in high school - the 10th Amendment, the balance between federalism and states' rights, redistribution of federal tax intakes (ie. "fiscal union"), etc. These are the reasons why are had full deductibility of SALT for 160 years of American history.

Not surprising your eyes glazed over all of this in 11th grade.

[Anonymous]

Anonymous wrote:Just reached agreement on $40,000 SALT Max.

That is perfect. Does not really help the really rich. But really helps the people like me. One income, kids in college. But I live in Montgomery County with property taxes of soon to be $18,000 a year and my MoCo income tax is like $12,000 a year

My property taxes keep going up but the 10K limit stayed the same.

People in particular older people with high property taxes and no mortgage got slammed.

My 80 year old Aunt has a house on Long Island and a condo in Florida she bought years ago and her SS and RMDs are taxed at state level. This is a god send. She is a widow and only got standard deduction $14,600.

Now she can write off a ton more.

Yes, I’m so glad that people with multiple homes won’t get slammed. Your aunt and people like her have zero agency and can’t sell one of their homes to decrease their tax burden 🙄