My thoughts on SALT

Early in Trump's presidency he pushed a tax reform package. Among the listed changes was a cap on State and Local Tax deductions (SALT). For anyone who doesn't know, SALT allows some people to use local taxes as a deduction on their federal income tax form. Since SALT does not reduce the expanse of the federal government, taxes in general have to increase to compensate. This effectively means that states with low taxes are subsidizing taxes in other states.



Obviously, I do not support this particular deduction. State rights are guaranteed in our constitution, and SALT has ultimately encouraged states to embrace high taxes. As an odd twist, the Democrats have argued that state rights should force the federal government to retain SALT. They insist that getting rid of a law that benefits them unfairly targets them. If that's the case, then it clearly should not have been added to the tax code in the first place.

Before I go any further, I should probably clarify something. It is true that the states benefitting the most from SALT are typically paying more than they are getting back from the federal government. This has nothing to do with SALT. There are several reasons for this including higher tax rates on the rich.

One thing that really caught me off guard in this debate was that Democrats were criticizing a change in the tax code that would have only impacted higher wage earners. This is the same segment of the population that Democrats keep complaining about not paying their fair share. Yes, it was packaged with items that would reduce taxes for the rich, but this particular piece went in the opposite direction. Keep in mind that it was a cap on SALT, not an elimination.