Fresh off their successful fight to make housing cooperatives eligible for Paycheck Protection loans, U.S. Sen. Chuck Schumer and Rep. Tom Suozzi have introduced paired legislation in the Senate and House that would eliminate the $10,000 cap on State and Local Tax (SALT) deductions imposed by the Trump administration’s tax law of 2017, reports the news site Patch.
"The cap on SALT deductions has been a body blow to New York families," said Suozzi, a Democrat whose district straddles the Queens/Long Island border. He added that without the full deduction, "families will leave New York and the last thing needed in the midst of the health and economic devastation of COVID-19 is to lose our residents and taxpayers."
The twin proposals would allow taxpayers to fully deduct their state and local taxes on their federal income returns as they did prior to 2017 legislation. Before the cap was placed, the average SALT deduction on Long Island was about $20,000 across over 700,000 households, the lawmakers said.
Schumer, the new Senate majority leader, added: "We need to bring our federal dollars back home and cushion the blow this virus – and this harmful SALT cap – has dealt so many homeowners and families locally.”
Suozzi, who first detailed how limiting the SALT deduction adversely affected Long Island at a House Ways and Means Committee meeting in 2019, noted that New Yorkers already subsidize other states by paying $36-to-45 billion more in taxes than they receive back from the federal government. Leaving the SALT cap where it is would result in "double taxation" by imposing federal taxes on the income used to pay state and local taxes, Suozzi said. Before the cap was enacted, taxpayers could deduct state and local real estate and personal property taxes, as well as either income taxes or general sales taxes as part of their itemized deductions. State and local income and real estate taxes made up about 60 % of local and state tax deductions while sales tax and personal property taxes made up the remainder, according to the lawmakers.
In a show of bipartisanship rarely seen during the presidency of Donald Trump, freshman U.S. Rep. Andrew Garbarino, a Republican from Bayport, joined with Suozzi in introducing the legislation. Garbarino said the SALT tax cap "unfairly penalizes Long Islanders," leaving a "devastating effect on New York."
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