The GOP’s SALT Deal Folly

Wall Street Journal ^ | May 21, 2025 | WSJ Editorial Board

[karpov]

After holding the tax bill hostage, House Republicans from high-tax states have extorted an enormous increase in the state-and-local tax deduction—not that they will get much credit for it. Unlike the bill’s pro-growth provisions, this giveaway to the affluent will have no economic payoff and subsidizes profligate Democratic-run states.

Speaker Mike Johnson late Tuesday greased the wheels for the reconciliation bill’s passage by cutting a deal with Republicans from New York, New Jersey and California to raise the state-and-local deduction to $40,000 with a 1% annual inflation adjustment over 10 years. The deduction would be phased out starting at $500,000 of income for couples.

The Ways and Means bill raised the current $10,000 cap to $30,000 for couples with a phase-out at $400,000. This was already a big and costly concession to Republicans representing high-tax jurisdictions. The $30,000 limit would have fully covered the state-and-local tax bills for the vast majority of households in New York City’s suburbs. But New York Republicans Mike Lawler and Nick LaLota demanded an even higher price. Mr. Johnson conceded to the $40,000 limit.

The higher SALT cap won’t increase the incentive at the margin to save or invest, though it will ease the high tax burdens of progressive states. The higher cap amounts to an average $11,100 tax cut for the affluent in such high-tax states, and it will raise the cost of the tax bill by hundreds of billions of dollars over 10 years without any compensating revenue feedback from faster economic growth.

Few voters in other states will benefit because the standard deduction (which the House bill increases to $32,600 for couples) is bigger than their itemized deductions. Texans pay no income tax and on average $3,872 in property tax. Why should they subsidize Democratic spendthrifts in Albany?

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TOPICS: Business/Economy; Editorial
KEYWORDS: beautiful; big; bigandbeautiful; salt; taxes

[karpov]

full article

[Red Badger]

We should not be subsidizing the Democrat’s taxes in their states. They voted for them, let them eat them...............

[dpetty121263]

And the Band plays on as the bow slips below the waves...playing Nearer to thy God...

[FreeReign]

The $30,000 limit would have fully covered the state-and-local tax bills for the vast majority of households in New York City’s suburbs.

True. Although anybody paying over 30K in property tax is likely earning more that 500K a year.

[RoosterRedux]

“Laws are like sausages. It’s better not to see them being made.”

—Commonly attributed to Otto von Bismarck

[Maris Crane]

I was an avid reader of the Wall Street Journal....

NOT ANY MORE...

I know you won’t miss me...but, I certainly will not miss you.

Thank God, there are other sources of unbiased information.

[joshua c]

all i know is the 10k limit is too low

i live in a low tax state in an avg home with an avg income

and my tax deduction is reduced by 50%

[Presbyterian Reporter]

The Standard Deduction for 2025 is $30,000 for joint filers.

I assume for folks in high tax states e.g. NY, IL, CA there are many who paying more than $30,000 in income, property, and sales taxes in those states.

Now that Congress is proposing a huge increase in the SALT limit, these high tax states have been given the green light to increase those state and local taxes.

[PeterPrinciple]

and my tax deduction is reduced by 50%

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you can’t look at things in isolation. your tax rate also went down and other things changed also.

Do a 10 year history of your taxes paid as a percentage of gross income. then report back to us with facts.

[FirstFlaBn]

Pays for a lot of TV ads for Guv Newscum. Maybe Mike Johnson will endorse his candidacy.

[bray]

The pork bill has too much Salt.

[DeplorablePaul]

Republicans hope to add seats in NY and NJ. Not complicated

[Jonny7797]

We’re so busy squabbling over the scraps on Fedgov’s table that we’ve missed our god given right to something better.

[Sacajaweau]

No...they just needed the votes...

We're hoping to get rid of Hochul. The legislature of NY is like 80% Dems...

[Brian Griffin]

I hope “the big, beautiful bill” dies in the Senate.

People need to be told that the old higher rates will be going back into effect since Congress doesn’t really want to cut spending.

That will cause screams that will result in spending cuts followed by the desired tax cuts.

The only power Trump has over Congress is the ability to veto tax cut continuation.

Why should he veto his own tax cut? Because it gives him power to extract reforms.

[Brian Griffin]

“Republicans hope to add seats in NY and NJ. Not complicated”

Forty percent of $40,000/year is $16,000/year.

There might be a cheaper way to get more seats.

Besides, the Democrats didn’t raise the SALT deduction when they could have.

[Brian Griffin]

“The legislature of NY is like 80% Dems...”

NY is doomed.

[Ex-Con777]

> No...they just needed the votes...<

That’s all it was. Now none of these NY and CA RINOS are allowed to complain about the mere $40Billion for a border wall and border security.

EC

[xzins]

At this point, the tax deduction for state taxes is a concession to high tax states. No doubt about it. But, not everyone pays 35000 in state and local taxes, even in NY. So, we want to hold up good for millions because we’re upset about a break for thousands, because EVERYONE will get hit if the Trump tax cuts expire.

I’d say pass it now and fix it later if it proves to be a problem. Since they do this stuff every single year, it’s not like there isn’t a chance to fix things.

The Trump Tax Cuts are far more important than this.

[DPMD]

The SALT caps resulted in higher tax payments due for many middle class families filing jointly and relying on mortgage payments plus property taxes to lower their margins, especially in high-tax states like CA.