essentialSALTes almost in the news

[essentialsaltes]

 The Washington Post had a live chat (well, it's still live as I write this) for people to ask questions about effects of the presidential election on one's finances.

The live chat featured a generic version of my question (seemingly many WaPo readers were thinking about it).

Jeff Stein's kind answer offers a little more detail than the public one.

[Once upon a time, I calculated that Trump's tax plan increased our effective tax rate by a bit more than a half a percent, largely because of the SALT cap. Raising to $20K would suit us fine.]

Cap on SALT tax deduction

Essentialsaltes in Los Angeles

 

7:39 a.m.

I believe Trump has mentioned removing the cap his own enacted tax plan imposed (which had negative effects primarily for residents of 'high tax' 'blue' states). Has either campaign said anything definitive about any changes to the state and local tax (SALT) deduction? And what might the consequences be?

 

 

 

 

 

Jeff Stein

 

This is a fun one that many of our readers care a lot about. Trump seems to have reversed himself on the SALT cap in part to help vulnerable N.Y. Republicans hang onto their House seats; this is a huge priority for them, despite the fact, as you point out, that it was the GOP tax law of 2017 that created the cap in the first place. As for Harris, she has avoided taking a firm position on the issue, although many top Democrats, including Senate Majority Leader Charles E. Schumer (D-N.Y.), have called for lifting the cap.

I’m guessing here and you can yell at me in a year if I’m wrong but I think it’s likely we see some pairing back of the cap – maybe raising it to $20K instead of $10K, or abolishing it for some lower-income taxpayers rather than everyone – in the big fight over taxes we’re expecting in Congress in 2025. Democrats will be reluctant to go too far, however, because a lot of economists say upper-income households would benefit most from repealing the cap.