by Dear Members of Congress:
We, the undersigned organizations, urge you to maintain the full deduction for state and local taxes (SALT) as part of tax reform legislation. We ask you to support an amendment on the floor to fully restore SALT, if it is in order. If the full SALT deduction is not preserved in H.R. 1, then we must urge you to vote no on this legislation on final passage as the only means to preserve this longstanding federal policy that is vital to middle class taxpayers, home values, state and local governments, and the public services in our communities.
As you consider your vote, we also encourage you to look across the Capitol at the Senate tax bill which eliminates SALT entirely. The partial elimination of SALT in H.R. 1 is not the end of this debate; it is only the beginning. And, any negotiation between a House bill with partial elimination and a Senate bill with full elimination is not likely to end with much, if any, of the SALT deduction remaining. The surest way to protect SALT and avoid this slippery slope is by fully restoring SALT to the House legislation.
Throughout this debate, supporters of H.R. 1 have promised taxpayers a tax cut. Yet, a recent analysis released by Americans Against Double Taxation found the plan would result in tax increases as high as $6,300, or more than $63,000 over 10 years, for many suburban homeowners, including both single filers and families, due in large part to the cuts to the SALT deduction. We think it is fundamentally unfair that middle-class individuals and families would lose this deduction and face higher taxes, while businesses would continue to be able to deduct their state and local taxes, in addition to many getting a large tax cut as well. That is an unjustified double standard.
A major reason for these tax increases is that the loss of the SALT deduction and personal exemptions is greater than the benefits provided under H.R.1 for many middle-class families and individuals in the suburbs. Moreover, the inclusion of a capped property tax deduction does little to address this problem, especially for the middle-class. A recent analysis by the Institute on Taxation and Economic Policy (ITEP) found that 71% of taxpayers who currently claim property tax deductions – and 80% of middle class taxpayers — will lose this deduction entirely under H.R. 1 because the combination of itemized deductions they can claim (which would exclude income and sales taxes) would be smaller than the standard deduction. In other words, the property tax deduction effectively would be taken away from nearly 29 million homeowners under H.R. 1 and those who retain it are among the wealthiest taxpayers.
The deduction for state and local taxes was one of the six deductions allowed under the original tax code when it was enacted in 1913. The partial repeal in the House plan would upset the carefully balanced fiscal federalism that has existed since the creation of the tax code, and it will result in unprecedented double taxation on taxpayers, forcing them to pay a federal tax on monies already paid in state and local taxes. It would effectively increase marginal tax rates and could lead to lower home values and cuts to critical services such as public safety, education and infrastructure development.
By eliminating the deductibility for income and sales taxes, which provide about two-thirds of all state revenue, the House legislation also threatens vital services relying heavily on state funding. Approximately 46% of all public elementary and secondary education in the U.S. is financed by states, as is most health care spending, so the elimination of deductions for these two primary state revenue sources could lead to cuts in school funding, health services and other essential community services even with the retention of a capped property tax deduction.
We urge you to preserve deductibility of state and local taxes as an essential, original and vital part of our nation’s tax code, and to oppose H.R. 1 if SALT is not fully restored.
Thank you.
Sincerely,
AASA, The School Superintendents Association
AFSCME Council 65 MN-SD-ND
AFSCME New Jersey Organizing Committee
American Federation of State, County and Municipal Employees
American Federation of Teachers
Association of Classified Employees-AFSCME Local 2250, Maryland
Association of Educational Service Agencies
Association of School Business Officials, International
California AFSCME Local 1001
California State Association of Counties
Civil Service Employees Association (CSEA/AFSCME New York)
Colorado Municipal League
Council of State Governments (CSG)
County Commissioners Association of Pennsylvania
CWA District 1
Employees Association of the Metropolitan Water District, AFSCME Local 1902
Federation of Protestant Welfare Agencies
Fiscal Policy Institute in New York State
Government Finance Officers Association (GFOA)
Independent Sector
International Association of Fire Fighters (IAFF)
International City/County Management Association (ICMA)
Iowa State Association of Counties
League of California Cities
League of Wisconsin Municipalities
Long Island Progressive Coalition
Massachusetts Municipal Association
Michigan Municipal League
Montana AFSCME Council 9
Montana Association of Counties
National Association of Counties
National Association of Police Organizations
National Association of Realtors
National Conference of State Legislatures
National Council of Nonprofits
National Education Association
National League of Cities
National Rural Education Advocacy Consortium
National Rural Education Association
National School Boards Association
New Jersey Association of Counties
New Mexico Association of Counties
New York Association of Towns
New York Conference of Mayors
New York State AFL-CIO
New York State Association of Counties
New York State Association of Chiefs of Police
New York State Association of REALTORS
New York State Builders Association
New York State Nurses Association
New York State Professional Firefighters Association
New York State School Boards Association
Ohio Civil Service Employees Association/AFSCME Local 11
Ohio Council 8, AFSCME
Pennsylvania Municipal League
Pennsylvania Public Employees, AFSCME Council 13
Service Employees International Union
Strong Economy for All
The Council of the Great City Schools
U.S. Conference of Mayors
United Domestic Workers, AFSCME Local 3930
United Nurses Association of California/Union of Health Care Professionals (UNAC/UHCP/AFSCME)
University of California Employees, AFSCME Local 3299
Utah Association of Counties
Virginia Association of Counties
Washington State Association of Counties
Wisconsin Association of Counties
CC: U.S. Treasury Secretary Steven Mnuchin
U.S. Senate Majority Leader Mitch McConnell
U.S. Senate Minority Leader Chuck Schumer
U.S. House Speaker Paul Ryan
U.S. House Minority Leader Nancy Pelosi
U.S. House Ways and Means Committee Members
U.S. Senate Finance Committee Members
National Economic Council Chair Gary Cohn
For more information, contact media@americansagainstdoubletaxation.org.
