Washington, D.C. – Americans Against Double Taxation (AADT) today released new data that shows that many middle-class homeowners would face a tax increase under the current “Big Six” tax reform framework that eliminates the state and local tax (SALT) deduction. Some homeowners in high-SALT GOP congressional districts would pay thousands more in taxes per year, according to new modeling of the “Big Six” tax reform framework. The Government Finance Officers Association (GFOA) developed the model, which is based on the IRS 2015 SOI data.
The GFOA model is now publicly available in the form of an online tax calculator, which allows taxpayers to assess the tax liability of an average homeowner in their zip code under both the current tax code and the tax reform framework that the White House and Republican Congressional leaders released last month.
“This new data makes it crystal clear that many middle-class homeowners throughout the country will see their tax bills increase, often by thousands of dollars, if the SALT deduction is eliminated,” said Bob Chlopak, Co-Director of the Americans Against Double Taxation coalition. “If a goal of tax reform is to help the middle-class, eliminating or changing the SALT deduction, which is claimed by more hard-working taxpayers than any other provision, is the wrong way to go. Congress must fully preserve the SALT deduction without limitation or restriction to protect the middle-class, home values, and the vital public services provided by state and local governments.”
In order to illustrate the impact of the “Big Six” plan on an average family of four who owns a home, AADT conducted an analysis of the top 20 high-SALT GOP congressional districts using the tax calculator. In these districts, AADT ran the congressional district office zip codes through the model, the full results of which are summarized in the table below. These zip codes are not necessarily reflective of the district-wide impacts of the “Big Six” plan, but they do illustrate the effects across 20 districts covering nine states, and provide an indication of the magnitude of the potential adverse impact on many families resulting in part from the elimination of SALT. Among the findings:
- In selected zip codes in all top 20 high-SALT GOP districts, an average family of four who owns a home would see a tax increase under the “Big Six” framework that eliminates SALT.
- An average family of four in 12 of the 20 zip codes would see a tax increase of more than $1,000.
- Seven zip codes with an increase of $1,000 or more fall outside of New York and New Jersey, demonstrating the broad geographic impact of eliminating SALT. These zip codes are found in Georgia (Loudermilk), Illinois (Hultgren, Roskam), Maryland (Harris), Minnesota (Lewis, Paulsen) and Virginia (Comstock).
- Rodney Frelinghuysen’s district (N.J.-11) would be the hardest hit among the 20 zip codes analyzed. An average family of the four in the same zip code as Rep. Frelinghuysen’s district office would see a tax increase of $4,409.
- An average family of four who owns a home in the same zip code as Lee Zeldin’s (N.Y.-1) district office would face the second highest tax increase: $2,995.
AADT also conducted a more thorough analysis of 76 zip codes in Rep. Tom Reed’s congressional district (N.Y.-23), which covers a large swath of largely rural Western New York. As with the top 20 high-SALT GOP congressional districts, AADT looked at the impact on a family of four who owns a home in these 76 zip codes. Among the findings:
- An average family of four who owns a home in Rep. Reed’s district would see their taxes increase under the “Big Six” framework in every one of the 76 zip codes analyzed (a spreadsheet of this analysis is available upon request).
- The tax increases range from $180 in zip code 14441 (covering Torrey, N.Y.) to a high of $3,518 in zip code 14850 (covering Ithaca, N.Y.).
- The average tax increase for the average family of four who owns a home in Rep. Reed’s district is $1,774.
The GFOA model is based on 2015 IRS SOI data and requires just four inputs – filing status, exemptions, dependents, and zip code. Within the zip code, the calculator will automatically import IRS data for average adjusted gross income, average state and local income tax paid, average sales tax paid, average property tax amount, average mortgage interest paid, and average charitable giving.
One of the six original federal tax deductions, SALT has been a staple of the federal tax code for over 100 years. Since 1913, SALT has helped support vital investments in infrastructure, public safety, homeownership, and education, and has provided states and local governments with the financial flexibility to meet the needs of their constituents. SALT also prevents double taxation of Americans by allowing taxpayers to claim a deduction for the state and local taxes they have already paid from their incomes.
The calculator may be found at: http://news.americansagainstdoubletaxation.org/salt-tax-calculator/
Analysis of Top 20 High-SALT GOP Congressional Districts (Using District Office Zip Codes)
|State||District||Representative||% Taxpayers Claiming SALT||District Office Zip Code||Average Tax Increase Under “Big Six” Plan (Family of Four)|
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About Americans Against Double Taxation
Americans Against Double Taxation is a coalition of state and local government organizations, service providers and other stakeholders dedicated to protecting the state and local tax deduction (SALT), a federal tax deduction claimed by 43 million American taxpayers that supports vital investments in infrastructure, public safety, home ownership and education. For more information, visit www.americansagainstdoubletaxation.org