The painful truth about the GOP’s co-called “Tax Cuts and Jobs Act of 2017” is finally becoming apparent. For many, it’s actually a tax hike. Some 11 million people – most of them in such high-tax states as New York, New Jersey, and California, all Democratic strongholds – will pay $323 billion more in taxes this year because of the new $10,000 cap on state and local tax (SALT) deductions, including real estate taxes, Crain’s reports.
The Treasury Inspector General for Tax Administration has released a redacted version of a report that places the number of tax bills above the $10,000 deduction cap close to 11 million. The deduction cap has caused a series of bill introductions in Congress from New York and New Jersey lawmakers seeking to reinstate the full SALT deduction. The IRS moved quickly to block efforts by state legislatures to pass bills to create workarounds for the SALT cap. The IRS maneuver was reviewed and approved by Trump’s Treasury Secretary, Steven Mnuchin.
The report comes as taxpayers are in the middle of filing their returns to the IRS for the first time under the new tax law. In addition to the SALT deduction limit, many taxpayers are also finding that their refunds are smaller than anticipated because of changes in withholding throughout the year.
Representative Thomas Suozzi, a New York Democrat, estimates that more than 250,000 of his constituents – or about half the people he represents on Long Island – are hit by the cap. Many of those taxpayers with large tax bills are middle-class workers. “They are just getting battered,” Suozzi says. “The cost of living is so high that they are just getting by.”
Eight governors have formed a coalition to fight the SALT cap, but the outlook in Congress isn’t favorable. Senate Republicans have already said they will not revisit the issue. Looks like it’s time to get used to tax “cuts,” Republican-style.
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