Coalition Warns Senate’s Deduction Repeal May Win in Negotiations

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By Che Odom

A coalition of groups hoping Congress will keep the state-and-local tax deduction is warning that the House’s compromise on the tax break could erode under pressure from Senate Republicans.

Negotiation between “a House bill with partial elimination and a Senate bill with full elimination is not likely to end with much, if any,” of the SALT deduction remaining, Americans Against Double Taxation wrote in a letter today to members of Congress. Americans Against Double Taxation is a coalition of state and local government groups, teachers unions, realtors and other organizations that are fighting against repeal of the deduction individuals may take for sales, income and property taxes paid to state and local governments.

The House tax bill (H.R. 1) proposes elimination of the deduction for sales and income taxes paid to local governments, but preserves it for property taxes up to $10,000. The Senate tax proposal would eliminate it completely. The SALT deduction has been a source of fierce battle in Congress, with many Republicans from high-tax states, such as California, New York, and New Jersey, pushing to preserve it.

The letter, signed by more than 65 national and state organizations, urges lawmakers to vote “no” on the House tax reform bill, which is up for a floor vote Nov. 16. A “no” vote is “the only means to preserve this longstanding federal policy that is vital to middle class taxpayers, home values, state and local governments, and the public services in our communities.”

Loss of Public Services

Loss of the deduction for income and sales taxes, combined with the property tax restriction, “will result in pressure on both states and local governments to cut funding for vital public services,” including education, public safety, health care and infrastructure, the coalition said in a press release.

The National Education Association said last week that elimination of all but the limited property tax deduction would put “nearly 250,000 education jobs at risk” because of the pressure to lower local and state taxes. The change in the deduction “would lead to cuts of approximately $250 billion in support for public education over the next ten years,” the group said.

To contact the reporter on this story: Che Odom in Washington at codom@bloombergtax.com

To contact the editor responsible for this story: Cheryl Saenz at csaenz@bna.com

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