Editorial

Now, not later, is the time to push for SALT reform

Posted

The Herald has editorialized a half-dozen times on Long Island’s desperate need to restore the federal income tax deduction for state and local taxes, which the Tax Cuts and Jobs Act of 2017, passed under President Donald Trump, limited to $10,000, costing many middle-class families here thousands of dollars annually. Now, it appears, we are on the brink of overturning the measure.
Sustained political pressure is needed to see the elimination of the $10,000 SALT cap through to the finish line. That’s why we are encouraging readers to write to U.S. Senators Chuck Schumer and Kirsten Gillibrand, both Democrats, to ensure that the proposal passes in the Senate when it is brought up for an upcoming vote.
There is a false impression that the SALT deduction affords an unfair tax advantage to the rich, a refrain repeated by conservative pundits across the nation. For decades, however, the deduction provided vital federal tax relief to middle-class families on Long Island and many other parts of the country.
Many conservatives argue that any family earning above $100,000 per year is affluent, even rich. And, they say, most of the people taking the SALT deduction — 98 percent — have a household income above that figure, with 80 percent earning between $100,000 and $200,000 and 18 percent above $200,000. Meanwhile, the average family income nationwide is $67,000 a year, according to census data.
That argument, however, does not account for regional cost differences — in particular, high property taxes in places like Long Island. It focuses only on income.
Long Island is one of the most expensive places to live in the country. The median household income here, $116,000, would buy a whole lot in a state like Mississippi, where the median household income is about $42,000; or New Mexico, where it’s $46,300; or Idaho, where it’s $48,600. On Long Island, however, $116,000 is not rich. It’s middle class.
So, while the SALT deduction has undoubtedly helped the wealthy, it has aided the middle class in high-cost regions like ours, and that is why it must be restored.
The House of Representatives, led by Rep. Tom Suozzi, a Democrat from Glen Cove, recently passed SALT reform as part of the $2 trillion Build Back Better bill. Bravo! The legislation, if passed by the Senate, would smartly cap the deduction at $80,000, allowing middle-class families in states like New York and California to take advantage of the federal deduction, but still limiting it to prevent the truly wealthy from benefiting disproportionately.
According to Suozzi, passage of SALT reform in the Senate would bring immediate tax relief to some 3.4 million New York taxpayers, including nearly 367,000 in Nassau alone. That would return dollars to our local economy, where they belong. Since enactment of the Tax Cuts and Jobs Act four years ago, New York has paid $12 billion more in federal taxes — money that has gone to states like Kentucky, home to Senate Minority Leader Mitch McConnell, a Republican who led the charge alongside Trump to pass the act.
The recent reform package passed in the House would raise the SALT deduction cap for nine years, through 2030. That seems fair. New Yorkers would have time to plan for its sunset. The legislation passed by Trump, on the other hand, caught many flatfooted, requiring desperate measures of them, including taking out loans just to pay their federal income taxes.
The $80,000 cap would take effect on people’s 2021 federal tax bills, providing them nearly immediate relief — which would be vital, given the economic hardships that many households have been forced to endure because of the ongoing coronavirus pandemic.
Lest any U.S. senator believe that the desire to restore the SALT deduction is confined to states like New York and California, he or she need only look to recent comments by Tom Cochran, CEO and executive director of the U.S. Conference of Mayors, to understand that the sentiment is shared by many elected leaders and taxpayers nationwide. “On behalf of the nation’s mayors,” Cochran said, “I want to commend Congressman Suozzi for his hard work on this issue. He never stopped fighting to restore the state and local taxes [deduction] for middle-income families in all states.”
Indeed. We mustn’t believe for a second, however, that the measure will pass in the Senate until it has. That is why we need everyone’s voice speaking out on this critical issue.