State Legislatures Group Urges Congress to Save Tax Deduction

Daily Tax Report: State provides authoritative coverage of state and local tax developments across the 50 U.S. states and the District of Columbia, tracking legislative and regulatory updates,...

By Che Odom

The National Conference of State Legislatures submitted a letter to congressional leaders asking that they oppose any attempt to repeal the federal deduction for taxes paid to state and local governments.

The bipartisan group of state lawmakers said in an Oct. 6 letter that elimination of the deduction would harm middle-class taxpayers and their communities.

“Eliminating this deduction will lead to higher tax burdens for tens of millions of middle-class taxpayers of every political affiliation, an outcome contrary to the stated goal of providing meaningful relief to taxpayers,” according to the letter, signed by South Dakota state Sen. Deb Peters (R), president of the NCSL, and the group’s president-elect, Illinois state Sen. Toi Hutchinson (D).

“Unlike the federal government, states do not have the luxury of borrowing hundreds of billions of dollars each year to fund the vital public services that Americans expect from them,” the letter said. “Eliminating the SALT deduction will make it even more difficult for states to provide these services and it will impede their ability to invest in infrastructure, fund education, and respond to the needs of their citizenries.”

The Republican tax framework, released Sept. 27, would eliminate many deductions for individuals, including the break for state and local taxes. Eliminating the deduction is one of the largest pay-fors in the GOP plan to cut tax rates, but Republicans from states with higher taxes have expressed concern it could raise taxes for their constituents. They are trying to convince U.S. House Ways and Means Chairman Kevin Brady (R-Texas) and other GOP leaders to soften the blow of cutting the tax break.

The state and local deduction, which costs an estimated $1.7 trillion over a decade, is one of the few revenue raisers White House advisers have specified. They frequently cite repealing the deduction as an example of carve-outs they want to end for the wealthy.

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

For More Information

Text of the letter is at http://src.bna.com/te1.

Copyright © 2017 Tax Management Inc. All Rights Reserved.

Request Daily Tax Report: State