The SALT Showdown: A Tax Break for the Rich?

Money Explainers

The battle over state and local tax deductions. Who benefits from the proposed SALT cap increase? The impact of SALT on state economies.  #HighTaxStates #TaxJustice #SALTDebate

Transcript

00:00Within President Trump's Big Beautiful Tax and Spending Bill, one of the most contentious

00:05provisions is the proposed increase to the state and local tax, or SALT, deduction.

00:12Currently capped at $10,000, the bill suggests temporarily raising this limit to $40,000

00:18for households earning up $2,500,000 a year.

00:24This change, however, would revert to the $10,000 cap after five years.

00:30Critics are quick to point out that this elevated cap primarily benefits high-income households

00:34in high-tax states.

00:36Adam Michel of the Cato Institute asserts that the $40,000 threshold is not a benefit for

00:43middle-income or average Americans in any state.

00:47He explains that for most Americans, especially those in lower-income brackets or states with

00:52lower taxes, this provision offers little to no advantage.

00:56Preston Brashers of the Heritage Foundation goes further.

01:01Stating a higher SALT cap will do nothing for 90% of U.S. taxpayers and will overwhelmingly

01:07benefit those with high incomes.

01:10He likens it to splitting the restaurant tab with the rest of the party after ordering the

01:14filet mignon, suggesting taxpayers in other parts of the country will end up subsidizing

01:20the high taxes of places.

01:23Like California and New York City, David Ditch, a senior fiscal policy analyst, agrees, noting

01:29that states like New York, New Jersey, California are best positioned to gain from an increased

01:35SALT deduction.

01:36The Committee for a Responsible Federal Budget echoes these concerns.

01:40Highlighting that increasing the SALT cap reduces federal revenue and disproportionately benefits

01:45taxpayers in high tax.

01:46High-income states.

01:48In fact, eliminating the SALT deduction entirely for individuals and businesses could generate

01:54over $1 trillion in savings.

01:56As E.J.

01:58Antoni, chief economist at the Heritage Foundation, articulates, removing the cap essentially returns

02:06to a situation where the rest of the country helps.

02:08Put the bill for those high-income earners in very few locations.

02:13This debate underscores a fundamental tension in tax policy.

02:17Who should bear the burden and who ultimately benefits from these complex deductions?

02:22Money explains.

Categoría

Transcripción

Recomendada