Democrats Expose Their Hypocrisy with SALT CRA Vote

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Posted by Tom Hebert on Wednesday, October 23rd, 2019, 5:13 PM PERMALINK

Senate Minority Leader Chuck Schumer (D-N.Y.) forced a floor vote today on a resolution that will repeal the Trump tax law’s cap on state and local tax deductions. While Democrats campaign on raising taxes on the wealthy, 42 Democrat senators proved their hypocrisy by voting for this massive tax break for their richest constituents. 

The Republican-passed Tax Cuts and Jobs Act (TCJA) implemented a $10,000 cap on state and local tax (SALT) deductions. The wealthy mainly took advantage of the unlimited SALT deduction. A recent report from the nonpartisan Joint Committee on Taxation shows that repealing the SALT cap would cut $40 billion in taxes for millionaires. In total, 94 percent of the tax breaks generated from ending the cap would be enjoyed by taxpayers making more than $200,000 a year. 

Functionally, the unlimited SALT deduction created two different federal tax rates: one for the wealthy in blue states, and one for the middle class in red states. Technically, a New Yorker with a $20,000 state tax bill had access to the same SALT deduction as a Nebraskan with a $5,000 state tax bill. In a pre-TCJA world, the Nebraskan would take the standard deduction instead of the SALT deduction, while the New Yorker would itemize and take the full SALT deduction. This creates a de facto subsidy for blue states. 

During the TCJA’s passage, Schumer said that eliminating the deduction “socks it to the middle class,” and called on fellow Democrats to “not go along with a tax plan that includes a tax cut for the folks who need it least.”

Hypocritically, Schumer is now pushing a tax scheme that helps those who need it least. 42 Democrats voted for the Schumer scheme to give the wealthiest blue state taxpayers a massive federal tax break:

  • Sen. Tammy Baldwin (Wis.)

  • Sen. Richard Blumenthal (Conn.)

  • Sen. Cory Booker (N.J.)

  • Sen. Sherrod Brown (Ohio)

  • Sen. Maria Cantwell (Wash.)

  • Sen. Benjamin Cardin (Md.)

  • Sen. Tom Carper (Del.)

  • Sen. Bob Casey (Penn.)

  • Sen. Chris Coons (Del.)

  • Sen. Catherine Cortez Masto (Nev.)

  • Sen. Dick Durbin (Ill.)

  • Sen. Tammy Duckworth (Ill.)

  • Sen. Dianne Feinstein (Calif.)

  • Sen. Kirsten Gillibrand (N.Y.)

  • Sen. Maggie Hassan (N.H.)

  • Sen. Martin Heinrich (N.M.)

  • Sen. Mazie Hirono (Hawaii)

  • Sen. Doug Jones (Ala.)

  • Sen. Tim Kaine (Va.)

  • Sen. Angus King (Maine)

  • Sen. Amy Klobuchar (Minn.)

  • Sen. Patrick Leahy (Vt.)

  • Sen. Joe Manchin (W.V.)

  • Sen. Ed Markey (Mass.)

  • Sen. Bob Menendez (N.J.)

  • Sen. Jeff Merkeley (Ore.)

  • Sen. Chris Murphy (Conn.)

  • Sen. Patty Murray (Wash.)

  • Sen. Gary Peters (Mich.)

  • Sen. Jack Reed (R.I.)

  • Sen. Jacky Rosen (Nev.)

  • Sen. Brian Schatz (Hawaii)

  • Sen. Chuck Schumer (N.Y.)

  • Sen. Jeanne Shaheen (N.H.)

  • Sen. Kyrsten Sinema (Ariz.)

  • Sen. Tina Smith (Minn.)

  • Sen. Debbie Stabenow (Mich.)

  • Sen. Jon Tester (Mont.)

  • Sen. Tom Udall (N.M.)

  • Sen. Chris Van Hollen (Md.)

  • Sen. Mark Warner (Va.) 

  • Sen. Ron Wyden (Ore.) 

Schumer’s skin in the game is clear: in 2015, before the SALT cap, Schumer wrote off $58,000 in state and local taxes. 

Since President Trump signed the TCJA into law, blue-state Democrats have worked overtime to find ways for their wealthiest residents to avoid the SALT cap. Governor Andrew Cuomo attempted an end-run around the cap by allowing New Yorkers to pay their local property taxes into a state-run charitable fund. 

The IRS recently issued new rules and guidance to stop these blue-state schemes. By voting to nullify the IRS guidance, Schumer and 41 other Democrats are aiding and abetting blue-state taxpayers that commit federal tax arbitrage by circumventing the SALT cap. 

Photo Credit: Senate Democrats - Flickr

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