Buttigieg’s SALT proposal would likely result in only a small percentage of households being able to write-off more from their tax bills. Only about 10% of taxpayers itemize -- including many earning more than $400,000 -- meaning that about 90% of people take the standard deduction, which makes them ineligible to claim the SALT deduction.
And, in many states with low or no state income taxes, many people don’t have more than $10,000 to deduct even if they are itemzing.
The Democratic-controlled House in December passed legislation that would temporarily repeal the SALT cap in exchange for raising the top tax rate. The passage was a symbolic victory, particularly for some moderate Democrats representing suburban districts in southern California and New Jersey, who had flipped seats in the 2018 midterms after voters were angry the tax law limited their tax breaks. Republican Senate leaders have said they won’t address the bill.
The Senate in October also rejected a resolution that would give states leeway to help residents avoid the $10,000 limit on SALT payments. Senator Amy Klobuchar, one of Buttigieg’s moderate rivals in the race, voted for the resolution. Senators Bernie Sanders and Elizabeth Warren were not present for the vote. Former Vice-President Joe Biden has said he favors removing the cap.
(Disclaimer: Michael Bloomberg is seeking the Democratic presidential nomination. He is the founder and majority owner of Bloomberg LP, the parent company of Bloomberg News.)
--With assistance from Tyler Pager.
This article was provided by Bloomberg News.