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Oct52017
Op-Eds

SALT Repeal: Illustrated

Alex Brill | AEIdeas

The SALT deduction is the largest itemized deduction and one of the largest tax expenditures in the entire tax code. I estimate that its repeal would raise $1.4 trillion in new revenue over a decade. In the piece for The Hill, I calculated how to “recycle” that $1.4 trillion in a distributionally neutral manner by lowering tax rates and increasing the standard deduction. The reforms being proposed by Republican lawmakers are somewhat larger than the reform I illustrate, but the exercise was intended mostly to demonstrate two things:

  1. Repealing a really large deduction that primarily benefits higher income earners can finance big rate cuts, including a reduction of the top rate to 35%; cut taxes for tens of millions of taxpayers; simplify the tax code considerably; and maintain the progressivity of the tax code.
  2. The GOP’s tax reform agenda, at least with respect to individual tax reform, can easily be accomplished without busting the budget.

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October 5, 2017Category: Op-Eds

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