Which is, of course, why so many Democrats are arguing that the SALT deduction should be returned to being unlimited. Because the beneficiaries would be the sort of rich folks in Democrat controlled areas who have to cough up the high local and state taxes:
Key Democrats want to keep most of Trump’s corporate tax cut — and slash more taxes for the rich
Even some of the most progressive members of Congress are demanding cuts that overwhelmingly benefit wealthy
Every member of the California House delegation, except House Speaker Nancy Pelosi, has called on Biden to lift the $10,000 limit on the State and Local Tax Deduction, a provision of tax law that is massively unpopular in affluent suburban areas increasingly represented by Democrats. Those California members include prominent progressives like Reps. Katie Porter and Ro Khanna, the former national co-chair of Sanders’ presidential campaign.
“Enactment of the SALT cap specifically targeted states and localities that have chosen to provide strong taxpayer support for critical government services such as education, health care, transit, and social services,” the lawmakers argued.
Every member of New York’s congressional delegation, except for Ocasio-Cortez and Rep. Kathleen Rice, D-N.Y., went further, signing a letter vowing to oppose the entire infrastructure bill unless it includes a repeal of the SALT cap. The letter’s signatories included newly-elected progressives like Reps. Jamaal Bowman, D-N.Y., and Mondaire Jones, D-N.Y.
To some extent the argument is about who gets to fleece those rich. Should it be the local politicians who use them to fund their local empires? Or should it be the Feds who use them to keep the country running?
But there are two things which are absolutely true. The first is that the SALT deduction at all is a subsidy to rich folks. Certainly any removal of the limit upon it would be. Because it means that those folks who live in high tax areas – who also itemise their tax returns, something that’s only worth doing if you are a rich folk – get a Federal tax break on their local taxes.
So, the benefit of this will flow to rich folks in Democrat areas – D because that’s where the taxes tend to be high.
The other thing it will do is de-expose those rich folks in D places to the full horrors of the taxes they’re being charged to run those progressive paradises. Currently, with the limitation, people are newly being exposed to just how high those tax rates are, the pain it causes. This is good of course, limitations on government by starving it are good.
So, we can recast this argument being made by these Congressional Democrats. We want a tax break for our rich folks so that we can soak them instead. Or, of course, we want the tax break so they don’t fund a break up of our progressive paradises…..