GOP targets Democrats’ biggest tax break
WASHINGTON — Republicans aren’t usually big on raising taxes, but they’re really eager to eliminate the federal deduction for state and local taxes.
Why? A look at the states that benefit the most from the tax break helps explain it — they are all Democratic strongholds. New York, Connecticut, New Jersey and California top the list of states where taxpayers get the biggest deductions. Not a single Republicanleaning state ranks in the top 10.
“Although Republicans usually recoil at any type of tax increase, cutting this tax break would almost be fun for them,” said Martin Sullivan, chief economist for Tax Analysts. “It provides massively disproportionate deductions to high-tax states controlled by Democrats.”
Proposals by House Republican leaders and President Donald Trump would repeal the tax break as part of their packages to overhaul the American tax code. But they are getting a lot of pushback from Republican lawmakers in Democratic-controlled states.
Almost 44 million claimed the deduction in 2014, according to the IRS. That’s nearly every taxpayer who itemizes deductions, a little less than 30 percent of all taxpayers.
Nationally, the average deduction is about $11,800, but it is much bigger in many blue states. New York is tops with an average deduction of more than $21,000. Connecticut is next at $18,900, followed by New Jersey at $17,200 and California at $17,100.
These are states with high property values, high costs of living, high incomes and relatively high state and local taxes. They are also states President Donald Trump lost in last year’s election.
The deduction allows taxpayers to write off real estate taxes and state and local income taxes and is heavily weighted to families with high incomes. Seventy-five percent of the benefits went to families making more than $100,000.
Rep. Kevin Brady, R-Texas, says eliminating a tax break that helps some people will help lawmakers lower tax rates for everyone.
“We’re proposing a much simpler code with lower rates where everyone gets help whether they are paying their state and local taxes or they are putting their kids in college,” said Brady, who chairs the tax-writing House Ways and Means Committee.
Eliminating the tax break would raise $1.3 trillion over the next decade, according to the nonpartisan Tax Policy Center.
The House Republican plan would eliminate most itemized deductions while nearly doubling the standard deduction, to $24,000 for married couples. It would keep the deductions for mortgage interest and charitable contributions.
The White House and Republicans have been privately negotiating their tax package for weeks, with no public sign that they’re near a consensus. Democrats have been excluded from talks.