Trump’s tax law capped a deduction that helped Californians. Gov. Newsom wants it restored
Gov. Gavin Newsom and six other Democratic governors Friday joined a growing chorus of officials urging an end to federal limits on state and local tax deductions that were imposed in the 2017 tax law President Donald Trump signed.
“Like so many of President Trump’s efforts, capping SALT deductions was based on politics, not logic or good government,” the governors wrote in a letter to President Biden.
“This assault disproportionately targeted Democratic-run states, increasing taxes on hardworking families. This was unacceptable then, and is simply untenable given the dire economic conditions caused by the pandemic,” they said.
In the past week, House Speaker Nancy Pelosi, D-California, has said she supports lifting the limits and some Democratic congressmen have said they won’t vote for any changes in the tax code unless the cap is repealed.
State and local tax deductions were unlimited until the Republican-authored 2017 tax cut bill put a $10,000 cap on the break.
The change was a notable blow to high-tax states such as California.
Newsom and the governors of New Jersey, New York, Hawaii, Connecticut, Oregon and Illinois wrote that “middle-class Americans are struggling under this federal tax burden, while corporations – which are still able to fully deduct SALT as business expenses – are profiting because of the same law.”
They called the impact on middle class families “particularly egregious when you consider that in the states most affected by this cap, the federal government already takes more in federal taxes than the states receive in federal support, effectively subsidizing federal payments to other states.”
Republican leaders have been opposed to lifting the cap, and Biden has not committed to a position.
“Our focus right now is on ensuring that we are getting relief to the broad swath of the American people who are most impacted by the downturn: the 10 million Americans out of work, people who are looking to be a part of growing industries of the future,” said White House Press Secretary Jen Psaki.
“But we understand that many Democrats — or some Democrats, I should say, are focused on that and interested in discussing it. We’re happy to discuss it with them.”
This story was originally published April 2, 2021 at 2:55 PM.
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