Getting SALTy again as Tax Scam 2.0 is debated

One of the reasons that Trump/GOP's Big Beautiful Tax Scam 2.0 is up in the air is because of a provision where I stray from most progressives. It deals with what's known as the SALT Cap, and it's something I've long called to be fixed, even if the outcome favors higher-income Americans.

To backtrack, let's talk about how we got here. The standard deduction was nearly doubled in the original 2017 Tax Scam, which likely cut taxes for lower-income Americans who may not have itemized to begin with. There was also an argument that it would make tax filing easier, because someone could just take the standard deduction without having to keep so many records and figure out strategies and documentation for certain tax deductions.

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But as a way of limiting the cost of the Tax Scam, there were limitations put on other deductions, and the limitation that ended up being the most common was the write-off for State and Local Taxes (SALT). This was set at $10,000 for single filers and for married couples filing jointly, and hasn’t changed in the 8 years since.

Meanwhile, the standard deduction has been allowed to grow with inflation, and as you can see, it totaled $29,200 last year for married, joint filers. This means more Americans have gotten hit by the SALT Cap, since their incomes and taxes got higher, but the amount they could write off in SALT didn’t change, making it less likely to have $29,200 in itemized deductions in 2024, which pushed them to take the standard one.

The guy who signed the 2017 Tax Scam into law said he would get rid of the SALT Cap if American voters would let him avoid prison return him to the White House.

Trump, the Republican presidential candidate, made waves September 17 by appearing to indicate he wants to overturn the $10,000 SALT cap established by the Tax Cuts and Jobs Act in a post on Truth Social about his upcoming campaign rally on Long Island, New York. Trump signed the TCJA into law in 2017.

“I will turn it around, get SALT back, lower your Taxes, and so much more,” Trump wrote.

The Trump campaign didn’t clarify Trump's stance on the cap in a request for comment from Tax Notes, instead bashing Democratic presidential candidate Kamala Harris’s “out of control inflationary policies” and saying Trump plans to quickly advance tax relief for working people and seniors should he take office.

Not surprisingly, Trump/GOP was in “say anything” mode last Fall to slip back into office. But now that they are in power, and the costs of Tax Scam 2.0 are slamming into reality, Trump is trying to backtrack on those words.

On Monday, the President told House Republicans that there now needs to be some kind of SALT Cap in Tax Scam 2.0, and that those from states that got hit with the Cap should stop asking for so much.

In a private meeting with House Republicans, Trump singled out the lawmakers from New York, New Jersey and California who have rejected the $30,000 deduction limit — three times the current cap — contained in the legislation moving through the House. Trump told lawmakers he wants to leave the SALT deduction limit “where it is” in the current version of the legislation, Representative Bruce Westerman of Arkansas said after the meeting…..

House Speaker Mike Johnson met with SALT holdouts late Monday, but left without an agreement.

In the meeting, the speaker offered to raise the cap on the SALT deduction from the $30,000 limit set in the legislation to $40,000 but only for four years and for people making less than $751,000, said a person familiar with the matter. After four years, the limit would snap back to $30,000 with a $400,000 income limit.

SALT caucus members said Tuesday they do not want a temporary increase and have said they want a doubled cap for joint filers.

Well the LEAST that should happen is to have the cap be doubled for joint filers. You know, like how pretty much all other deductions are, including the standard deduction, which is the item that two-income married couples often end up taking because it gives them a bigger write-off than they can get from itemized deductions because of the SALT Cap.

Then Trump did some kind of public whining about how changing the SALT Cap would be more likely to help people in states that generally vote for Democrats (I’ll spare you the stupidity of the quote). In addition to the sick idea that people in states that vote one way should be punished for doing so, it conveniently ignores that many of those blue states pay more in taxes than they take out (unlike the poorer red states that many of those tax dollars are funneled to).

For the record, I’m fine with redistributing taxes that come from richer places to poorer places, as I don’t believe that certain people should have a second-class existence just because there isn’t as much income and wealth to be had in those places. But the fact that richer blue states then pay higher state and local taxes to make up the difference IS THE REASON WE HAVE A SALT DEDUCTION IN THE FIRST PLACE.

On the flip side, it’s also laughable to hear Coastal GOPs claim that $30,000 or $40,000 is still too low of a SALT Cap. Think about how big your incomes + property taxes have to be in order to owe more than $40,000 in those types of taxes. For example, my wife and I have a combined income that puts us around the top 20%-25% level of US household incomes, and our most recent SALT write-off would have been somewhere around $19,000 if we didn’t have the $10,000 limit. Being able to write off $19,000 in SALT may have allowed us to write off our mortgage interest and charitable contributions instead of taking the standard deduction of $29,200, or at least made us consider actions that would get us beyond that level.

And that’s why expanding the SALT Cap and getting rid of the marriage penalty would be an especially useful reform that would help upper-middle class, 2-income couples. If you limit the SALT Cap to something like $30,000 joint and $15,000 single, you keep it targeted and don't give as much to the super-rich and wealthy. So this means we don't go back to the pre-Tax Scam days where hundreds of thousands of dollars could be written off because there wasn’t any SALT Cap at all. And while I'd like to see the GOP Tax Scam banished, I understand that also means no SALT Cap and a huge giveaway to certain rich people would return. So $15K/$30K would be a good compromise measure that helps both ways if some kind of Tax Scam 2.0 has to happen.

I'm not sure what might be in the pile of crap that might emerge onto the full House floor, but the fact that the Rules Comittee is supposed to start its meeting at 1am overnight tells me that there isn't going to be anything they want normal people to see. Let's watch to see if the Coastal GOPs get what they want on SALT for Tax Scam 2.0, or if they get nothing and accept it anyway. At which point, I'd expect a whole lot of them to lose in 2026 just like several of their GOP counterparts did in those states in 2018, after selling out constituents on the SALT Cap.