After an embarrassment over failure to repeal Obamacare, Republicans are very close to passing a tax bill. The House already passed their version of the legislation 227-205 votes on Nov. 6. Instead of normal procedure, the Senate Republicans are utilizing budget reconciliation rules which allow them to pass legislation with only 50 votes, instead of the usual 60 required for bills of this nature. The bill already passed the Budget Committee on Nov. 28, increasing the chances that the bill will be voted on in the near future.
One loophole, which seems as a minuscule detail in the bill compared to the more pressing issues such as the corporate tax rate, which will be closed as a result of the legislation is the state and local tax deduction, or SALT for short.
SALT is a tax loophole that allows for individuals to deduct both state and local property taxes and either state income taxes or state sales taxes, whichever of the two is a higher rate. However, under the House bill that was already passed, SALT would be eliminated but individuals could deduct property taxes up to $10,000. However, under the Senate’s bill, SALT is completely eliminated all-together.
While, there are arguments for and against SALT, this loophole seems exactly like the kind of policy that conservatives would support; it releases burdens on individuals by allowing for a tax deduction and is anti-big government, something that it seems more and more conservatives seem intent on doing.
The GOP most likely does not actually disagree with the policy of SALT. However, they are cutting it in order to pay for the tax breaks that they are giving to corporations. The House bill that was passed reduced the corporate tax rate, a change that was high in priority to Paul Ryan and the majority leadership. The concerning part about the elimination of SALT is not the policy itself, but is the seemingly political reasons why SALT is even being considered in this bill in the first place.
Taxes can be a very polarizing issue in modern America. Although not as divisive or personal as Healthcare, which can be framed in a life-or-death way, taxation is an issue that will most likely be a highlighted issue in the 2018 midterm elections. Fifty-two percent of United States adults favor raising taxes on corporations while only 24%, half as much, think that the corporate tax rate should be lowered. Lowering the tax rate for corporations is not a politically popular stance, which is something the GOP leadership knows. Further, it is not guaranteed or necessarily proven that reducing the corporate tax rate would actually create better or higher-paying jobs. In an attempt to reduce their political risk, the GOP is paying for their corporate tax deduction, in part, by eliminating a deduction that hurts those in blue states most. The House’s plan, which allows for a cap on property tax deductions, hurts California the most because of their law that makes it difficult to raise property taxes. Because of relatively low property taxes, Californians play very high taxes on their income, meaning that the $10,000 cap on property tax deductions would prove to have little impact.
Overall, the elimination of SALT increases the tax burden on those in blue states unfairly. It is no coincidence that all but one of the House Republicans that dissented and voted against the tax bill were from New York, New Jersey, and California, the three states that would be most impacted by the elimination of the SALT tax. Instead of being responsible for their own actions against their voters, the GOP is distancing themselves from the issue by hurting those in blue states. There is something un-American about this; those in the federal government are supposed to take actions that would be best for the country, not for their party. By intentionally eliminating a policy that helps those in blue states purely to pay for a corporate tax cut that the majority of Americans actually oppose, the GOP is putting partisan goals ahead of the desires of Americans.
The elimination of SALT highlights a larger issue with the GOP tax bill; the Republican leadership seems more interested in helping corporations than helping actual individuals. The Republicans are using this tax bill to further the interests of the large donors that bank roll their campaigns. The GOP, who pride themselves on putting more money in the pockets of who they call the “average American,” are hurting the lower and middle class with their bill. The Congressional Budget Office said the bill would hurt those making under $30,000 a year while given the largest benefits to the rich. In addition to reductions of various deductions, taxes would eventually increase for those earning $75,000 and below. Instead of helping the very people they claim to represent, the Republicans are hurting individuals in order to lower taxes on corporations and the extremely wealthy. For a political party that claims, “America first,” the policies in their tax framework seem as if their real motto should be “corporations first.”