WASHINGTON – As tax reform heats up in Congress, Elizabeth Kautz, Republican mayor of Burnsville, Minn., and Mark Stodola, Democratic mayor of Little Rock, Ark., are urging lawmakers to continue the state and local tax deduction (SALT).
“If our taxpayers lose the deduction for their state and local income, property and sales tax, they will face double taxation. There will be a lot of attempts to portray this as a benefit to the wealthy or a subsidy for the state and local government,” Kautz said on a conference call briefing recently to launch the Americans Against Double Taxation campaign.
“So let’s make sure this is simply said: If this goes through, instead of allowing working families and every one of our communities to deduct the amount they pay in state and local taxes, the federal government will basically be forcing taxpayers that make up the backbone of our community to pay taxes a second time on the same income,” she added.
With the SALT deduction in place, “taxpayers who itemize deductions on their federal income tax are permitted to deduct certain taxes paid to state and local governments from their gross income for federal income tax liability purposes,” according to the Tax Foundation.
President Trump’s tax reform blueprint, if it became law, would eliminate the SALT deduction.
Kautz, former president of the U.S. Conference of Mayors, said ending the SALT deduction would “disrupt the ability” of state and local governments to raise the revenue they need for “critical” public services.
“This may not be in the headlines or seem to be the focus when we hear about tax reform, but ladies and gentlemen the threat is real and the impact could be devastating to families across the country in just about every community: urban, rural and suburban,” she said.
Stodola, the first vice president of the National League of Cities, said the federal tax code is “convoluted and has needed simplification” for a long time but the SALT deduction must remain part of any tax reform package considered in Congress.
“We also know that double taxing American families and having a federal government pressure cities to lower taxes are not the ways to pay for it and it’s certainly not the way to move America forward. Reform simply cannot strip tax exemptions that many of our middle-class families rely on and Washington cannot and should not deny cities the responsibility to raise the revenues needed to meet our community’s needs that are decided on a local level,” he said.
“In other words, Washington would pass the cost of tax reform onto America’s 19,000 cities and our federal leaders would wash their hands of the tough decisions we on the local level as city leaders need to make in order to keep our budgets in the black,” he added.
Greg Cox, a Republican San Diego County supervisor and first vice president of the National Association of Counties, echoed the call for maintaining the SALT deduction.
“This is not a partisan issue. This is about helping everyday Americans make ends meet. This is about allowing states and communities to solve state and local problems. Far from being a loophole, the state and local tax deduction is one of the six original federal tax deductions and has helped support state and local investment since 1913,” Cox said. “The state and local tax deduction is claimed by 43 million taxpayers in all 50 states, including both Democratic and Republican districts.”