Sen. Chuck Grassley (R-Iowa) today is offering an amendment to the Democrats’ partisan $4.2 trillion reckless spend and tax budget that would prevent the lifting of the State and Local Tax (SALT) Deduction cap as many Democrats have advocated, a move that would amount to a six-figure tax break for the wealthiest Americans mostly in blue states.
Industry experts across the political spectrum agree: removing the SALT cap would disproportionately benefit extremely wealthy Americans and leave middle and low income and minority households without the tax break.
Tax Policy Center: 96 percent of middle-income households, those making between about $52,000 and $93,000 annually, would get no tax reduction at all. The 4 percent that would benefit would receive an average tax cut of about $400. By contrast, 93 percent of those making $1 million or more would get a tax cut, averaging about $48,000.
Institute on Tax and Economic Policy: At the national level and in every state with available data, Black and Hispanic families would receive smaller average tax cuts than white families, thereby growing the gap in after-tax income between these families and higher-income white households… SALT cap repeal is primarily a boon to upper-income white families. In total, more than two-thirds (or $67 billion in 2022) of the tax cuts under SALT cap repeal would flow to white taxpayers earning over $200,000 per year—a group that accounts for less than 7 percent of all families nationwide.
The vast majority of families—regardless of race—would not benefit from SALT cap repeal, and families of color are even less likely to see any tax benefit. Nationally, Black families are 42 percent less likely than white families to benefit from SALT cap repeal—that is, 5.6 percent of Black families would receive a tax cut compared to 9.7 percent of white families. Similarly, Hispanic families are 33 percent less likely than white families to benefit, with only 6.5 percent of Hispanic families receiving any tax cut under SALT cap repeal. The disparity between white families and families of color in many of the states whose congressional delegations have been the most vocal opponents of the SALT cap are even larger.
The Hill: Black families would be 42 percent less likely than white families to receive a tax cut if the $10,000 cap were repealed, while Hispanic families would be 33 percent less likely than white families to get a tax cut.
NBC: More than two-thirds of the tax cuts under a potential SALT cap repeal in 2020 would go to those making more than $200,000 per year, which is less than 7 percent of U.S. families, according to the institute. Only 9 percent of American households could see any benefit from a SALT cap repeal, according to the Tax Policy Center. The same analysis found that 96 percent of the benefits from a SALT repeal would flow to the top 20 percent of earners, with 57 percent of benefits going to those with earnings in the top 1 percent.
The White House has been hesitant to agree to a repeal of the SALT cap due to the cost, however. In its first year, the measure brought in $77.4 billion, and removing the cap would cost about $88.7 billion in 2021 alone, according to the nonpartisan Joint Committee on Taxation.
Brookings: Who would benefit from removing the cap on the SALT deduction? The rich – especially the very rich. Almost all (96 percent) of the benefits of SALT cap repeal would go to the top quintile (giving an average tax cut of $2,640); 57 percent would benefit the top one percent (a cut of $33,100); and 25 percent would benefit the top 0.1 percent (for an average tax cut of nearly $145,000). The remaining four percent of the benefit of removing the cap would go the middle class (i.e. middle 60 percent), for an average annual tax cut of a little less than $27.
But lifting the SALT cap would give essentially no benefit to the middle class. The second and third quintiles would see no change in after-tax income, on average. The fourth quintile would see a miniscule 0.1 percent change in after-tax income. Even the 80th to 99th percentiles would not get much—a 0.4 percent increase in after-tax income. The top one percent, in contrast, would see a 1.9 percent increase in after-tax income.
Original source can be found here.
