Democrats Fight Against Republican Tax Plan (Because It Would Hurt Their Wealthiest Donors)

Democrats Fight Against Republican Tax Plan (Because It Would Hurt Their Wealthiest Donors)

Which party cares more about helping working class families? Almost invariably, the ill-informed would answer resoundingly with "the Democrats!" And so it would seem -- so long as you didn't look too hard.

The Republican party's latest attempt to take back the tax system for the people has been coming under fire from Democrats all over the country. Nancy Pelosi called the plan "an insidious effort to raise taxes on middle class families … across America." Senator Ron Wyden claimed that "hardworking middle-class folks are not going to appreciate Congress double taxing them." Andrew Cuomo called the plan "a pure tax increase."

As usual, the Democrats are lying through their teeth — to protect their wealthiest donors.

What has these greedy leftists so worried is the GOP's attack on the current State and Local Tax, or SALT, deduction system. Aside from drastically simplifying the current tax system and benefiting the vast majority of tax-payers, elimination of SALT would primarily hurt wealthy families, the majority of whom vote Democrat.


The ability to deduct state and local taxes from one’s federal tax bill goes as far back as the income tax itself. According to the most recent Trump administration budget, it is the sixth-largest individual income tax expenditure and represents a loss of revenue of $100 billion annually.

That’s a lot of money, considering it benefits the less than 30 percent of taxpayers who choose to itemize deductions, and even then, it’s only those who aren’t limited by the alternative minimum tax. Some argue that SALT is an expression of our federalist tradition to give priority to localized spending or is a way to avoid the double taxation of state and local taxpayers’ income, but these arguments are overwhelmed by the fact that the targeted benefits mostly favor higher-income earners in high-tax states and are highly distortive.

Data show that the lion’s share of the SALT flows to high-income taxpayers, who are most likely to itemize. According to the Tax Policy Center, “about 10 percent of tax filers with incomes less than $50,000 claimed the SALT deduction in 2014, compared with about 81 percent of tax filers with incomes exceeding $100,000.”

It's no coincidence that the states that would most heavily be affected by a SALT repeal are California, New York, New Jersey, Illinois, Texas and Pennsylvania. These states all have one thing in common: high taxes and a large pool of wealthy Democratic donors. 

How much money could the GOP's plan ultimately cost the Democrats? $1.8 trillion over the next decade.

California alone accounts for nearly 20% of SALT deductions, yet continues to sink deeper into its $1.3 trillion state debt (exacerbated earlier this year by a $1.9 billion accounting error).


So what is it that Democrats are valiantly trying to protect?

This SALT deduction, as it’s sometimes called, will cost the federal government $1.8 trillion over the next decade, according to the Tax Foundation.

And the benefits go almost entirely to upper-income families.

Fewer than 22% of tax filers even claim the state and local tax deduction, and the vast majority of these are higher-income families. While 78% of those with incomes above $200,000 claim the deduction, just 7% of those making between $30,000 and $40,000 do. For most taxpayers, the standard deduction is more valuable.

In addition, because the wealthy pay more in state and local taxes, and are taxed at higher rates at the federal level, the value of this tax break sharply increases with income.

The Joint Committee on Taxation calculates that for those earning more than $200,000, the SALT deduction cuts their federal tax bill by an average $6,295. For those with incomes of between $100,000 and $200,000, it’s just $857. Those earning from $30,000 to $40,000 get an average of $93 off their federal tax bill.

As a result, 88% of the $1.8 trillion cost of this tax break goes to the 10% of families with incomes above $100,000.

In other words, this is one hugely regressive tax break.

The left is irredeemable, using poor and working class Americans as a platform to sell a bold-faced lie. This is nothing new -- in fact, we should be getting pretty good at catching the same tricks over and over again.

Stay alert. Stay alive.

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