One big question revolves around the elimination of the SALT deductions. Critics argue this is “double taxing” that would hurt the middle class. Others say, not so fast, amigos.
The majority of taxpayers do not itemize, so they get no benefit from any SALT deductions. However, a doubling of the standard deductions, the lowering of marginal rates on personal and pass-through income, and an increase child tax credits would provide a tax cut for these filers. That means that more of the middle class will retain more money each week in their paycheck.
That’s a good thing for them, the economy, and housing.
Yes, some taxpayers in the higher income bracket, who do itemize, in states with higher taxes may see a slight tax increase. That’s because other taxpayers throughout the country, in states who hold the line on taxes, are paying to subsidize the current SALT deductions. Is that fair?
These taxpayers may still benefit as the proposed reforms will allow the majority of taxpayers and businesses to retain more of their earnings, bolstering the economy, leading to more and better jobs, and higher wages. That benefits everyone.
Maybe an elimination of the SALT deductions will force all states to be a little more fiscally responsible when it comes to raising real estate, income and/or sales taxes. That would benefit those who now live in such states.
Seems to me that, for a change, the federal government is trying to do something good for all taxpayers. Maybe the states should do the same for their taxpayers.