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  • SALT cap increasing

    Interesting article that I read today about the second most expensive item in the Build Back Better plan will increase the SALT cap. I live in an income tax free state. What are common deductions that are included in the SALT category?
    Raising the state and local tax deduction cap would primarily benefit the top 10 percent of income earners.

  • #2
    it's paywalled.
    This is a gift to high income filers. SALT includes state, county, city income taxes, state and local property taxes.
    Now compare your standard deduction to : SALT + mortgage <$750k interest + charitable contributions.
    Many high income earners will be converted to itemized deductors.

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    • #3
      Its a gift to high income earners in blue states. Helps people buy a 3.5 million dollar home.

      Comment


      • #4
        Don't get too excited. The bill is still in flux. Progressive and moderate Dems don't agree on priorities. CBO has to score it revenue neutral, and it is not. And several features added by House Dems may not pass muster with the Senate Parliamentarian.

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        • #5
          Originally posted by Sampter View Post
          Its a gift to high income earners in blue states. Helps people buy a 3.5 million dollar home.
          and gives back some of the federal revenue that otherwise gets distributed to red states, if one really wants to go there.
          “. . . And the LORD spake, saying “First shalt thou take out the Holy 401k. Then shalt thou save to 20%, no more, no less. 20% shall be the number thou shalt save, and the number of the saving shall be 20%. 25% shalt thou not save, neither save thou 15%, excepting that thou then proceed to 20%. 30% is right out . . .””

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          • #6
            Originally posted by blippi View Post

            and gives back some of the federal revenue that otherwise gets distributed to red states, if one really wants to go there.

            I don't disagree with you, but the narrative doesn't quite fit that the bill only to help "working class people". That is all that I was saying.

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            • #7
              Originally posted by Sampter View Post


              I don't disagree with you, but the narrative doesn't quite fit that the bill only to help "working class people". That is all that I was saying.
              Well, think of it not as a SALT repeal, but a new higher cap. It definitely benefits high earners in high tax states (say 90th-99%ile), but not 0.1%ile earners, much less the multi-millionaires and billionaires. So I still say it does benefit the working class, though probably upper-middle class with professional jobs on W2s, and to a lesser extent profitable small business owners.

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              • #8
                Don't non income state tax people get to write off ALT taxes?

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                • #9
                  There's still a cap; so it does help -- mostly the 150-400k salary folk in blue heavy states aka: CA+NY+NJ. It also does help those purple states with heavy suburban swing vote districts -- so yeah a very tempting carrot to pass and rally on for mid-terms cause BBB is clearly going to be a partisan vote.

                  People priorities on vote: pocketbook. If a 250k household suburban family gets $2k back with BBB by lifting SALT? I very much will get their attention

                  Here's the tax rates for states:
                  https://taxfoundation.org/publicatio...-and-brackets/
                  -MN
                  -WI
                  -IA
                  -AZ
                  -GA
                  -NC

                  All stand to benefit suburban earners in these purple states.
                  Last edited by StarTrekDoc; 11-17-2021, 10:12 AM.

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                  • #10
                    Originally posted by StarTrekDoc View Post
                    There's still a cap; so it does help -- mostly the 150-400k salary folk in blue heavy states aka: CA+NY+NJ. It also does help those purple states with heavy suburban swing vote districts -- so yeah a very tempting carrot to pass and rally on for mid-terms cause BBB is clearly going to be a partisan vote.

                    People priorities on vote: pocketbook. If a 250k household suburban family gets $2k back with BBB by lifting SALT? I very much will get their attention

                    Here's the tax rates for states:
                    https://taxfoundation.org/publicatio...-and-brackets/
                    -MN
                    -WI
                    -IA
                    -AZ
                    -GA
                    -NC

                    All stand to benefit suburban earners in these purple states.
                    Pertinent to this audience, I read somewhere that MN even charges a separate "physician" income tax, can anyone from that state comment?

                    Comment


                    • #11
                      Originally posted by Marko-ER View Post

                      Pertinent to this audience, I read somewhere that MN even charges a separate "physician" income tax, can anyone from that state comment?
                      Not from MN but had to google it.
                      https://www.revenue.state.mn.us/provider-tax
                      1.8% of gross receipts. OUCH!

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                      • #12
                        Originally posted by GasFIRE View Post
                        Not from MN but had to google it.
                        https://www.revenue.state.mn.us/provider-tax
                        1.8% of gross receipts. OUCH!
                        how is stuff like that even constitutional?

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                        • #13
                          Originally posted by G View Post

                          how is stuff like that even constitutional?
                          words never uttered in any legislature in the country: "let's tax the lawyers a little extra."

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                          • #14
                            The SALT deduction was capped at 10k when Trump's tax bill was passed - it was both a punitive measure for the blue states that didn't vote R, but also to allow his bill to remain "budget-neutral" so it could pass, and thereby the uber-rich could continue stacking fiat at the expense of everyone else.

                            I think uncapping it is beneficial insofar it will actually help upper-middle class folks, instead of just the uber-wealthy. It will do nothing for the working class however.

                            Comment


                            • #15
                              Originally posted by xraygoggles View Post
                              The SALT deduction was capped at 10k when Trump's tax bill was passed - it was both a punitive measure for the blue states that didn't vote R, but also to allow his bill to remain "budget-neutral" so it could pass, and thereby the uber-rich could continue stacking fiat at the expense of everyone else.

                              I think uncapping it is beneficial insofar it will actually help upper-middle class folks, instead of just the uber-wealthy. It will do nothing for the working class however.
                              It's not uncapped, it is just new, higher cap on SALT deductions. But yes, it will mostly help upper-middle class not uber-wealthy or the working poor. Then again, you have to make enough money to pay tax to be able to *take* a deduction. If your tax contribution is nil or even less than 3000$/year then where is the deduction going to be coming from? Then it is called a "credit" or with no sugar coating should be called wealth redistribution (no judgement on whether that's right or wrong, just a fact).

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