


With the fate of the tax bill hanging in the balance, it’s time for House Speaker Mike Johnson to call the bluff of those blue-state Republicans who claim that raising the cap on the state and local tax deduction from the current $10,000 to a ridiculous $30,000 doesn’t go far enough.
All of the catering to the so-called SALT caucus is based on the assumption that they have significant leverage. That’s because Johnson only has three votes to spare and, if no deal is struck, the current tax law will expire at the end of the year and revert to the old system in which there was no cap on the SALT deduction.
Yet if you look at the effects of the expiration of the 2017 individual tax cuts more broadly, in fact, nearly all of the constituents in the districts of the SALT holdouts would experience higher taxes.
According to analysis from Ryan Ellis, anywhere from 93 percent to 98 percent of taxpayers in the districts of the holdouts pay state and local taxes exceeding $30,000.
The number benefitting from a return to the old system would be even lower than the few percent left over, because everybody would be subject to higher marginal tax rates, the current $2,000 child tax credit would go away, and it would bring back the Pease limitation on itemized deductions. Also, it would bring back the old alternative minimum tax, which would offset much, if not all, of any increased SALT deduction.
What’s especially dishonest about the SALT caucus is that they don’t want to go back to the way things used to be. They want a very small number of very wealthy people choosing to live in high-tax states to be able to go back to the old unlimited SALT tax deduction system, while maintaining all of the benefits of the current system, with its lower rates, weaker AMT, and so on.
So it’s time to call their bluff and see how eager they are to let the 2017 tax cuts expire and explain why they decided to raise taxes on nearly every one of their constituents.