Read more about the current Greenbook proposals. ...
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House Democrats have proposed a bill that would remove the $10,000 cap on state and local tax (SALT) deductions. Called the “Restoring Tax Fairness for States and Localities Act,” the bill would increase the cap to $20,000 for married filing joint taxpayers for the 2019 season, then eliminate the cap entirely in 2020 and 2021. The proposed legislation would offset the substantial revenue loss by restoring the pre-Tax Cuts and Jobs Act (TCJA) top individual tax rate of 39.6 percent and lowering the income threshold at which that top rate applies.
If policymakers intend to extend the cap repeal beyond 2021 without increasing deficits, it appears additional income offsets would be required. Under the Ways and Means bill, the offsetting changes to the top rate would be in effect from 2020 through 2025 – even though the restoration of the deduction is in effect only through 2021 – after which the major individual tax provisions of the TCJA are scheduled to expire altogether.
Reps. Thomas Suozzi (D-N.Y), Bill Pascrell (D-N.J.) and Mike Thompson (D-Calif.) sponsored the bill, which was scheduled to be marked up by the Ways and Means Committee yesterday. Given that Congress is set to break soon, it doesn’t seem likely there will be much movement on the bill until next year. Even then, with the Senate controlled by Republicans, it seems unlikely that a bill would get through given the need to increase tax rates to accommodate the increase in the SALT deduction cap.
Read more about the current Greenbook proposals. ...
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