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April 5, 2021

Lamont, other governors press for end to SALT deduction cap

The U.S. Capitol Building in Washington, D.C.
By Zachary Vasile

Gov. Ned Lamont and the governors of six other states are calling on President Joe Biden to support repealing the cap on state and local tax deductions implemented by the Trump administration, which they maintain was unfairly targeted at states run by Democrats.

In a letter to the president made public Friday, the governors slammed what they called a “system of double taxation” established by the cap —also known as the SALT deduction cap— that is costing taxpayers billions.

“Middle-class Americans are struggling under this federal tax burden, while corporations —which are still able to fully deduct SALT as business expenses— are profiting because of the same law,” they wrote.

The federal tax measure limits state and local tax deductions to $10,000. Lawmakers from Democratic-leaning, high-tax states in the Northeast and West Coast have blasted the rule since its adoption in 2017 and filed legal actions in federal court in an attempt to reverse it.

With Democrats now in control of the White House and Congress, however, the possibility of a repeal through some form of executive or legislative action is no longer out of the question.

Arguing that the initial implementation of the SALT rule was little more than a thinly-veiled punishment meted out by then-president Donald Trump against blue states, the governors said the cap must be lifted to restore “tax fairness.”

“Like so many of President Trump's efforts, capping SALT deductions was based on politics, not logic or good government,” they wrote. “This assault disproportionately targeted Democratic-run states, increasing taxes on hardworking families. This was unacceptable then, and is simply untenable given the dire economic conditions caused by the pandemic.”

The group praised the “incredible steps” Biden has already taken to alleviate the economic pain brought on by COVID-19, including the recently-passed American Rescue Plan, but asked the president and Treasury Secretary Janet Yellen to “go further” by “eliminat[ing] the SALT cap entirely.”

The message was signed by Lamont, Gov. Phil Murphy of New Jersey, New York Gov. Andrew Cuomo, Gov. Gavin Newsome of California, Hawaii Gov. David Inge, Gov. J.B. Pritzker of Illinois, and Gov. Kate Brown of Oregon.
 

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