Abbi Basalis, Senator Bernie Sanders, Nonpartisan Institute On Taxation And Economic Policy discussed on TIME's Top Stories


Brought to you by audible. A wonky tax break for the well off is a bigger problem for Democrats than you'd think. By abbi basalis. In its edible form, salt is used to dry out meat, and its mineral form, it's used to dry out snowy highways, and in its tax form, salt, the acronym for state and local tax deductions that disproportionately benefit well healed taxpayers might sound like a topic bound to dry out conversations. Even senator Bernie Sanders, a key player on negotiations concerning the salt cap and the Democrats flagship, $1.7 trillion social spending and climate build back better package, quipped that salt does not excite most people on the hill. I thought she was the only person in the world who was concerned about salt. He told me, gesturing to another reporter when I asked him for an update on salt's status. But don't be fooled, as Senate Democrats struggle to pass build back better, the debate over salt may be one of the most interesting things happening at the capitol. Whatever form the provision ends up taking could have major financial implications for taxpayers and high tax states. Huge electoral consequences for the Democrats who represent those states and significant political fallout for the party's make the rich pay their fair share political messaging. That's because raising the cap on salt deductions from $10,000 to $80,000 as prescribed in the house past version of built back better, would disproportionately help taxpayers rich enough to benefit from itemizing their federal tax deductions, which is to say the richest 5th of Americans. According to a November analysis from the nonpartisan institute on taxation and economic policy, the higher salt cap would primarily benefit the richest 20% of taxpayers and three fourths of the benefits would go to the richest 5%. Democrats are split over what to do about it. Some Democrats like senator bob Menendez and representative Tom swazi, who recently announced a run for New York governor, support raising the cap on salt deductions as a means to reverse the effect of Trump's 2017 tax bill, which led to tax hikes in blue states. Others like representative Jared golden argue against including raising the cap on the grounds that it paints the Democratic Party as hypocrites. If they raise the salt cap, the second most expensive item in a bill designed to bolster American working families would be a tax break for coastal elites. The standoff leaves Democrats in a damned if they do damned if they don't bind, deliver a windfall to wealthy Americans, or screw over democratic states on the eve of a midterm election where Democrats narrow majorities in both chambers are at risk. The tricky politics of raising the salt cap or not. Republicans created the $10,000 cap on salt deductions as a means to offset the cost of their other tax cuts in the 2017 tax cuts and jobs act. The TCJA reduced the corporate tax rate from 35% to 21% and decreased individual tax rates across the board. Because the TCJA nearly doubled the standard deductible, the main losers of the new $10,000 salt deduction cap were well to do people in states with the highest property taxes..

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