Connecting state and local government leaders

Ways and Means Chair: Property Tax Deduction to Remain Intact Under GOP Tax Plan

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Connecting state and local government leaders

U.S. Rep. Kevin Brady's comments have implications for the fate of the state and local tax deduction, or SALT, as the Republican push to rewrite the nation's tax code continues.

Republicans will not seek to eliminate a federal tax deduction for property taxes, one of the congressional lawmakers at the helm of the GOP-led effort to overhaul the U.S. tax code said over the weekend.

“At the urging of lawmakers, we are restoring an itemized property tax deduction to help taxpayers with local tax burdens,” House Ways and Means Chairman Kevin Brady said in a statement Saturday.

The Texas Republican's comments were initially reported by Bloomberg. Route Fifty couldn't immediately reach spokespeople on Sunday for Brady's office or the Ways and Means Committee.

Property taxes are one type of tax that federal taxpayers can deduct under what's known as the state and local tax, or SALT, deduction.

Under current law, the deduction covers state and local property taxes on real estate, as well as on personal property like boats and cars.

The SALT deduction also applies to state and local income and sales taxes. But it for now appears deductions for these two state and local taxes could still be curtailed under forthcoming Republican tax legislation, which is expected to be unveiled this week.

Americans Against Double Taxation, an advocacy group that includes state and local government organizations such as the National Governors Association, the U.S. Conference of Mayors and the National Association of Counties, knocked the plan Brady described.

Partial elimination of the SALT deduction, they said, "would insert the heavy hand of Washington into state and local finance decisions, dictate winners and losers among states, and unfairly penalize taxpayers in states that rely significantly on income taxes."

The group added: "We will vigorously oppose this plan and continue to work for the preservation of the full state and local tax deduction."

Disagreements over whether to eliminate or dial back the SALT deduction have been a central sticking point in the tax debate so far, creating discord in Congress even within the GOP's ranks. 

Republicans from New York and New Jersey have been some of the most vocal in their opposition to altering the deduction.

The reason the SALT deduction is an attractive target as congressional Republicans and the Trump administration advance plans to rework the tax code is that it's elimination could generate an estimated $1.3 trillion in federal revenue over a decade.

This is a sum that could be used to offset rate cuts for individuals and businesses that lawmakers and the president support.

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Bill Lucia is a Senior Reporter for Government Executive's Route Fifty and is based in Washington, D.C.

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