The Myth of the Middle-Class SALT Cap Victim
Even in high-tax New York and California, every income group making less than $1 million saw its federal taxes go down after the 2017 tax law.
Trump’s tax reform was about lot more than just SALT deductions.
Source: Bloomberg
The $10,000 cap on federal income-tax deductions for state and local taxes imposed by the Tax Cuts and Jobs Act of 2017 was “a body blow to New York and middle-class families in New York,” in the words of Long Island U.S. Representative Tom Suozzi — the leader of efforts in Congress to repeal the cap.
He may be right about the body blow to the state, or at least the state government. But the 2017 tax law hasn’t harmed most middle-class families in New York or anywhere else, at least not directly. Sure, the SALT cap lost people in Democrat Suozzi’s affluent district $5.6 billion, or about $15,000 per taxpayer, in itemized deductions from 2017 to 2018, according to recently released Internal Revenue Service data, but there were lots of other changes in the tax law that benefited them. Three of the biggest were an across-the-board reduction in income-tax rates, a near-doubling of the standard deduction and a sharp scaling back of the alternative minimum tax. Put it all together, and it turns out that every income group in Suozzi’s district saw its overall federal income tax rate go down from 2017 to 2018.