DURBIN HITS GOP TAX PLANS
Deductions for state and local taxes part of the battleground
Sen. Dick Durbin, D- Ill., said Sunday the GOP incometax proposals pending in Congress would have potentially “devastating” impacts on Illinois if the final product repeals the ability for a taxpayer to deduct state, local and property taxes.
The Republican- controlled House and Senate each have plans to overhaul the federal income tax system. Ending the local tax deductions is one of the many items under consideration.
Illinois individuals got a rate boost last July and now pay a state income- tax rate of 4.95 percent of net income. Property taxes on a main residence vary according to where a person lives but add up to thousands of dollars a year.
Ending the state and local tax breaks— nicknamed the “SALT” deductions— is only part of the story.
Some House Republicans have said they will fight any Senate bid to take “SALT” away.
Also under consideration is a doubling of standard deductions and, for some, a lower overall tax rate. Whether you will pay less or more or stay the same depends on the specifics of your tax situation. But a good first place to start when looking at the different proposals in Congress— and evaluating what they mean to you— is your own federal income tax return, to determine how much money you saved by taking the “SALT” deductions.
“When it comes to working families, it’s a mixed bag. In my state of Illinois, it’s going to be devastating that they cannot deduct their state and local and property taxes that they pay. They will be paying a tax on a tax. This is not a tax break for them,” Durbin said of the GOP tax plans in an interview with Jake Tapper on CNN’s “State of the Union.”
Asked to react to Durbin’s comment on CNN, U. S. Rep. Peter Roskam, R- Ill., amember of the tax- writing House Ways and Means Committee, told the Sun- Times in a statement, “The disingenuousness displayed by Democrats on this tax reform bill is astounding.”
Speaking about the House version, Roskam said, “When the Democratic party here in Illinois voted to override the Governor’s veto of a 32 percent tax increase — taking more money out of the paychecks of hardworking families — we heard nothing from Illinois democrats; now they criticize a tax plan that allows hardworking Americans to keep more of the money that they make. Some have said that this plan would eviscerate the state and local tax deduction— this is simply not true. For Americans who choose to itemize, mortgage interest, property- tax deductions and charitable contribution deductions are still available to them. This bill maintains the property tax deduction ( up to $ 10,000), the mortgage interest deduction ( for a loan up to $ 500,000) and the charitable deduction.”
The Senate plan was unveiled lastweek. Said Durbin, “Jake, we just saw this plan on Friday,” but he said senators question “why would we want to risk our economy, raising the taxes on many working families, to give a permanent tax cut to the wealthiest people in America and to run up the national debt?
“That is not a sound policy to build America’s economy.”
The Senate version wipes out the property- tax deduction; the House plan would allow a deduction of up to $ 10,000. Before any bill is sent to Trump to sign, the Senate and the House have to reconcile their differences and vote on what will be the final product.
Treasury Secretary Steve Mnuchin, also discussing taxes on “State of the Union,” defended President Donald Trump’s false claim that the GOP tax plan would be the biggest tax cut in history.
“There’s lots of different ways of looking at it. This will be the largest change since President Reagan,” Mnuchin said.
Trump makes the claim the “middle class” will save under the GOP plans even though under many scenarios people may pay more— especially if the SALT deductions get repealed. The White House has not yet defined the “middle class” income ranges.
Asked about middle- class tax increases under the GOP plans, Mnuchin said, “Well, as you know, one of the things that’s so complicated about our tax system today is that everybody has a different situation, takes advantage of different parts of the code. It’s very complicated. So, by simplifying the code, we’re putting everybody on a level playing field. We have literally run hundreds, if not thousands, of examples within Treasury. And for most people— and, again, itmay not be 100 percent, but by far the majority— both the House and Senate version provide middleincome tax relief. And that’s what we want to do.”