Trump Open to Increasing SALT Deduction
Blue states might get some surprising help.

POLITICO (“Trump tells House Republicans to find a ‘fair number’ on SALT“):
New York Republicans came out of a Mar-a-Lago meeting with Donald Trump on Saturday confident that the incoming president is on board with increasing a key deduction for state and local taxes. And they have marching orders from Trump: Go back to Congress and negotiate a “fair number.”
“The president certainly wants to increase the deduction for SALT to provide more relief, because he knows that our mayors and governors are crushing taxpayers,” said Rep. Nicole Malliotakis (R-N.Y.) in an interview after the meeting. “He wants us to work on what would be a fair number.”
The deduction, known as SALT, has been a constant headache for lawmakers of both parties who represent states with high property taxes, such as New York, California and New Jersey. Republicans’ 2017 tax law put a $10,000 cap on the deduction, amounting to a tax increase for many voters, and both Democratic and GOP members from those states have been pushing for a fix ever since. While the lawmakers didn’t come to an agreement on specific policy proposal that would go in a huge, party-line bill that would tackle taxes, energy and the border, momentum towards consensus on the SALT deduction is a big step forward for Republicans on passing their party’s priorities.
Yet the push still must navigate complex politics, simply because many GOP members from low-tax red states detest the deduction as they look to cut spending. There’s also fractious politics within the SALT caucus itself, which has had difficulties in the past agreeing on the appropriate “ask.” Privately, House GOP leaders have told some Republicans that without a way forward on SALT, they can’t properly plan for just how big the final package will be and how much they’ll need to cut spending to pay for it.
This has been a really odd issue. The cap on SALT taxes back in 2017 seemed to come out of nowhere, as it wasn’t an issue that was emphasized—or, so far as I recall, even mentioned—in the 2016 campaign. By every indication, it was mostly a Screw You to the blue states, which tend to have higher tax rates, bolstered by the traditional Republican fiscal austerity urge.
There have been many efforts since, notably led by Speaker Emeritus Nancy Pelosi, since to roll back the cap. But it has run into the rather sticky problem that doing so amounts to a tax cut to the wealthiest Americans, which Democrats ostensibly oppose. (Ironically, that Republicans are supposed to oppose tax hikes with every fiber of their being did not seem to factor in.)
While I would benefit considerably from removing the cap, I really can’t defend it from a public policy standpoint.
Effectively, it amounts to transferring my tax bill to people less well off economically than me. Or, more realistically, adding it to the national debt, the interest payments on which are strangling the economy. The closest I can come to a good argument is “I shouldn’t be taxed twice on the same income.” But all taxes would fit into that bucket.
A better argument existed for phase-ins, in that it’s simply unfair to make what amounts to a radical change to tax code that negatively impacts decisions that were made factoring in existing tax policies. I don’t know that we’d have made considerably different choices in buying our current house, in that we needed the ability to house a large family, but we did certainly expect to be able to write off our property taxes.
Just because Trump said something doesn’t mean it’s going to actually happen (see Greenland, Panama Canal, Canada) so how about we wait until the GOP actually proposes something and we see how good/bad it is before we draw conclusions?
It’s not safe to ignore what President Xlon’s position is on the issue.
James, Kathy and Not the IT Department have it right: who the hell cares what Trump says? Why waste the column ink on it? Now, if Thune or Johnson said it, that would be something.
@MarkedMan:
What escapes Trump’s pie-hole is contingent on who he last spoke to. When he speaks to someone else, something else will escape.
There has to be some mistake here James. I was reliably told that Trump and Republicans with large are the only party that cares about working class folks struggling to get by and the national debt.
In all seriousness, being a New York State resident and a homeowner, I am in a similar situation. And while I didn’t like SALT going away, I can’t help but agree that there is no good reason for it (beyond saving folks like us a little money).
I think the only argument you can make is that it is those same blue states which pay in the most federal taxes and receive the least in federal benefits in return.
Steve
This is basically what Chip Roy’s CoS told me. He argued that the solution for those most impacted was to lower their taxes.
The actual solution is to continually push to simplify the tax code. I would prefer a simple multiple tier (5-7 tiers) progressive tax rate system ranging from 0-50 percent (as an example).
About that $36T debt and it’s interest burden: To make an appreciable reduction, we will have to lower the American standard of living to a point that will be thoroughly rejected by the voters…. who themselves carry nearly $18T consumer debt. It’s not like the voters exercise significantly more restraint in their personal affairs. In fact, our entire consumer economy is built on that lack of restraint (and lack of financial savvy.) It’s this country’s “true religion.”
@Matt Bernius: “In all seriousness, being a New York State resident ”
If you don’t mind my asking, whereabouts?
Perhaps, in this one instance. But the low housing cost states are so overwhelming subsidized already by the higher housing cost ones, this is just a drop in the bucket.
@wr:
Not at all, Long Island born and raised (Amityville) and have spent virtually all of my adult life in and around the greater Rochester, NY area.
Interestingly, we have a few commenters here who have spent time in Rochester.
BTW, sorry for all you are going through out there. I have a lot of colleagues in the LA area and I know how challenging it is out there.
First: What traditional Republican fiscal austerity urge? That went went away with the end of the Cold War, right?
Second: Yes it was definitely a big ‘eff you to the Blue States, especially here in California.
In CA property tax rates are set in accordance with the 1978 Proposition 13, and enshrined in the State Constitution. Basically, baseline property taxes are set at 1% of the purchase price plus any additional items (school bonds, etc) approved by the voters. The base rate may only be increased by a maximum of 2% (1.02) annually. Unlike many other states, local officials in CA do NOT set the property tax rate, NOR does the state legislature or the Governor. Prop 13 would have to be amended, repealed, or changed by a vote of the people in statewide ballot proposition, period.
So … CA is where ‘ordinary’ middle class people might have to spend $600K-$800K to purchase a simple tract home and most people make the decision to purchase a home based on knowing with some certainty what their property taxes and mortgage interest will be.
So, yes … Republicans were waging war on the Blue State middle class by reducing SALT.
“Effectively, it amounts to transferring my tax bill to people less well off economically than me. ”
I think I would recast that. You don’t know the incidence of taxation and benefit by income. Instead, I would say that the residents of, say, CA or NY, are free to vote for politicians who tax and then shower benefits on them as the voters please. Its there state. However, if you believe, as most Democrats appear to, that they receive vital benefits commensurate with the taxes they pay, then you set up a real moral dilemma by not having a cap. By not capping you shift the relative, net of federal, tax burden to non-CA, NY residents. Or said another way, CA and NY residents get the full benefit of their state politician’s largesse, but others bear the burden. Beggar thy neighbor.
A fellow named steve made a point about relative contributions by state to the Fed coffers. But that conflates two issues. I think arguments about what states contribute disproportionately are worthy. Although probably impossibly complex. But lets not compound our problems by shifting tax burdens but retaining benefits. States: place your votes, live with the consequences. Don’t tell Alabaman’s what they should do.
@al Ameda:
Then it seems you have two options. A. Move. B. Lobby and vote; convince your fellow citizens that the progressive policies a majority of them vote for are killing the state. My understanding is that the latter is failing, and so people are leaving in droves. It seems the “big eff-you” is coming from the progressives who now dominate the Dem party. But don’t ask AL, SC, TN, FL etc to bail you out for poor public voting/policy decisions. Its an interesting thing. NYS, IL, MN residents are leaving in droves as well. What’s the common thread?
It’s less of a tax break for you than for the state and metro area — it’s the federal government subsidizing the higher taxes of states that actually provide services to their needy. It just passes through you.
Capping SALT blew a hole in the budget of those (mostly) blue states, which ended up being filled by cutting services to the needy.
@Connor:
Not sure you understand. I’m not complaining.
When it comes to property taxes, we have tax certainty.
The rate can only be changed by a vote of the people.
@Connor:
Housing prices — rent and mortgage. Housing prices affect a lot more people than higher taxes on the wealthy.
Even when property taxes are passed on to renters (which is basically always) increases in property taxes are just noise compared to the rest of the rent increases — if property taxes were 10% of the rent, and went up 10%, that’s only a 1% increase in rent.
Housing costs are a crisis in a lot of the more built up areas. And it’s a growing crisis in some of the red states, at least the parts people want to live in. They’re just a little behind the curve. Miami rents jumped by 25% since 2021 — although it is showing signs of cooling.
It’s also why we have those icky homeless people no one wants to look at. Some are insane or on drugs, but even a lot of those are people who became homeless and were then crushed by homelessness.
ETA: And thank you, Connor, for giving me a chance to get on my soapbox about the housing crisis. It’s honestly one of my favorite soap boxes.
@Connor:
Three of those red states are net takers, they don’t pay for anyone’s problems, not even their own.
Here’s a thought: why don’t you see if you can make red states like AL, SC, TN, AK, OK, KY, MS and more less shitty and we wouldn’t have so many people moving to California. Incidentally, the CA population rose a net 67,000 in 2023. California would have more money to spend on its own problems if we didn’t have to keep paying for MAGA losers.
@Connor: Don’t remember seeing you here before so first, apologies if you’ve posted before and I’ve just been oblivious. Second, thanks for the interesting and well argued point. But I’d like to challenge you on two things.
You seem to conflate housing costs with wealth. But someone in CA with a tiny $650k house and a 50 or 100 year mortgage, and working an assembly line job and trying to keep a 20 year old car running is more deserving of the break than a Mississippi middle manager with a 2800 square foot house that cost half that and two new SUV’s in the garage,
Also, I don’t understand you equating state expenditures with higher housing costs. Perhaps indirectly, as places with better schools, medical care and infrastructure are generally more desirable. Is that what you meant?
@Matt Bernius:..Rochester…
I was born at Strong Memorial hospital in Rochester in January of 1948. I’m trying think of something Rochester/tax related so I don’t veer too far off topic…
I remember being disappointed one time when my dad could not attend my Boy Scout Troop meeting that parents had been invited to because he had to stay home and work on his tax return.
The first political event that I attended was when my dad took me to the Rochester Monroe County airport (since renamed after Frederick Douglass) in the fall of 1960 when I was 12 years old to see Richard Nixon wave from the door of his airplane during a campaign stop. My dad said that Kennedy was too young to be president. My parents were staunch Missouri Synod Lutheran. If there was any anti Catholic bias towards Kennedy I never heard it. The Irondequoit Bay Bridge that carries New York State route 104 did not yet exist when I lived there. When we moved from Irondequoit to West Webster any trips into the city would take us on Culver/Lake Road at the north end of the bay. A stretch of road that was lined with hot dog stands like Don and Bob’s and Vick and Irvs. In the winter there would always be cars racing each other on the frozen bay. Now and then there would be a car half submerged usually with it’s rear end sticking up out of the bay. Winter on the shores of Lake Ontario seemingly lasted 11 months out of the year. Summer was 24 hours on a Wednesday the first week of August.
@al Ameda: Fiscal austerity was never an urge on the right. It was a cudgel to thump “do nothing Democrats” with while claiming to be helpless to solve the problem.
ETA: And ‘ordinary’ middle class people do not spend $600-800k on houses. Only the people on the top end of the breathtakingly wide and bifurcated contemporary American middle class do. And many of them only hold homeownership as an aspiration.
The SALT thingy ties in with the rest of the budgeting process.
Progress Pond regarding the ramifications etc.:
“Progress Pond”
lots more discussion …
summation:
@charontwo: Good post. It’s worth noting that needing to make a few concessions to get a dozen or so Dems in purple states to go along would have been a no brainer for 250 years. But the Republican insistence that they can only pass important legislation with only Republican votes is epically bad strategy and governance.
@Connor:
Lousy Winter weather.
@Connor:..NYS, IL, MN residents are leaving in droves as well.
Is a drove a specific unit of measure?
@Mister Bluster: I believe in customary times, when it applied to cattle, it was 12 or 24? I could be wrong, obviously. It’s late, and I’m high. 😉