Governor’s Group Joining Coalition to Fight for Tax Deduction

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By Che Odom

The National Governors Association plans to team up with other organizations on a new public-private coalition to press congressional Republicans not to eliminate the federal deduction for taxes paid to state and local governments.

The White House and House Speaker Paul Ryan (R-Wis.) have proposed ending the deduction to free up money to pay for a broader tax-reform plan that would involve lower rates on corporate and individual incomes.

NGA Executive Director and CEO Scott Pattison said the group will be called Americans Against Double Taxation. “It’s a coalition of state and local groups that’s officially launching Thursday,” Elena Waskey, NGA spokesperson, told Bloomberg BNA.

The governor’s association has already aligned with other organizations this year to fight for the deduction, along with preserving the exemption of interested earned from municipal bonds.

In an April letter to Congress, seven organizations—including the National Governors Association, the U.S. Conference of Mayors, and the National Conference of State Legislatures—said that eliminating or capping “federal deductibility for state and local property, sales and income taxes would represent double taxation, as these taxes are mandatory payments for all taxpayers.”

Taxpayer Impact

Advocates of the deduction say that ending it would leave many people paying double taxes on their income.

The elimination of the deduction would be felt more by residents of high-tax states, such as California, New York, and New Jersey, than those in states with relatively low tax rates. However, it’s viewed by some in Congress as a must to create any level of “true tax reform” to the country, a staff advisor to a ranking Republican House member told Bloomberg BNA on the condition of anonymity because he isn’t authorized to speak on the subject.

Other large revenue raisers floated by congressional Republicans, such as the border adjustment tax and elimination of interest deductibility, have been tabled or have failed to generate traction within President Donald Trump’s administration. That leaves the SALT deduction, estimated to raise between $1.26 trillion and $1.9 trillion over a decade by the Urban-Brookings Tax Policy Center and the Tax Foundation, respectively.

With assistance from Ben Brody in Washington.

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

To contact the editor responsible for this story: Jennifer McLoughlin at jmcloughlin@bna.com

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