Trump Calls for Rolling Back Tax Law, Advocates for Reinstating SALT Deduction

https://icaro.icaromediagroup.com/system/images/photos/16351285/original/open-uri20240917-18-1w3tfv3?1726616138
ICARO Media Group
Politics
17/09/2024 23h34

In a surprising move, former President Donald Trump took to social media on Tuesday to announce his support for rolling back a key provision of his own tax legislation. Trump expressed his intention to reinstate the state and local tax deduction, commonly known as SALT, which he controversially capped during his presidency in 2017.

In a post on his Truth Social platform, Trump stated that if he were to return to the White House in January, he would "get SALT back" and "lower your Taxes." While Trump did not provide specific details, his comments mark the first time he has called for revising a component of his major legislative achievement.

The 2017 tax law introduced a $10,000 cap per filer on the previously unlimited federal deduction for state and local taxes. This limitation heavily impacted individuals residing in high-tax blue states, such as New York, New Jersey, and California, who itemize their deductions. Opposition to the cap was particularly fierce among Democrats, as they argued that the Republican-led administration was using tax policy to wage a culture war. Some Republicans from these states also believe that the cap should be lifted.

Trump's recent comment adds to a series of impulsive policy statements that have surprised members of his own party. While most Republicans oppose expanding the SALT deduction, Democrats have been pushing to lift the $10,000 cap. Senate Majority Leader Chuck Schumer, D-N.Y., criticized Trump's remarks, stating that he has always been in favor of eliminating the SALT cap.

Schumer has vowed that if he remains majority leader next year, he will ensure that the SALT cap expires at the end of 2025. However, it remains uncertain whether a Republican-led Congress would support lifting the cap. Earlier this year, a group of House Republicans blocked a vote initiated by New York GOP members to expand the SALT deduction.

Conservative tax policy adviser Ryan Ellis expressed concern about reinstating the SALT cap, emphasizing that the revenue generated from it was used to fund rate cuts in the 2017 tax law. Ellis argues that removing the cap would result in a significant tax cut for the wealthy without providing substantial economic growth.

Despite the lack of specifics, Trump’s campaign spokesperson, Karoline Leavitt, highlighted Trump’s intent to address the economic challenges faced by working-class Americans. Leavitt emphasized that Trump's pro-growth and pro-energy policies would make lives more affordable and that tax relief for working people and seniors would be prioritized.

Rep. Mike Lawler, R-N.Y., a first-term congressman seeking re-election, supported Trump's remarks, echoing his longstanding support for lifting the SALT cap. However, Lawler's Democratic opponent, former Rep. Mondaire Jones, accused Trump and Lawler of being responsible for the SALT limitation. Jones emphasized the need for change and suggested that Lawler had not taken any action to rectify the situation during his time in Congress.

Rep. Josh Gottheimer, D-N.J., dismissed Trump's comments, highlighting that Trump himself was responsible for implementing the SALT deduction cap. Gottheimer compared the situation to an arsonist volunteering at the fire department, questioning Trump's intentions.

The potential reinstatement of the SALT deduction could add further financial strain to Trump's already costly proposals. According to the Committee for a Responsible Federal Budget, eliminating the SALT cap would raise the cost of extending the 2017 tax law by an estimated $1.2 trillion. While congressional Democrats have advocated for expanding the SALT deduction, Vice President Kamala Harris has yet to take a clear stance on the matter.

It remains to be seen how Trump's call for revisiting the SALT deduction will be received by lawmakers and the public alike. The debate surrounding this tax provision will likely continue as both parties grapple with finding a solution that addresses the concerns of taxpayers from high-tax states while considering the overall impact on the federal budget.

The views expressed in this article do not reflect the opinion of ICARO, or any of its affiliates.

Related