“Writing in The Hill, Alex Brill of the conservative American Enterprise Institute estimated that repealing the deduction could help subsidize major parts of the tax plan, including the proposed tax cut for top filers and the expansion of the standard deduction. As Brill wrote, that could mean a cap on how much of a filer’s income could be eligible for the deduction.”
On the other hand, the SALT deduction incentivizes higher state and local spending and doesn’t have the great distributional implications, as my colleague Alex Brill carefully explains here. I could probably go either way on this one.
“The tax benefit provided $338 billion in deductions in 2015, making it the most widely claimed itemized deduction that year, according to the most recently available IRS statistics. Fully repealing it would raise $1.4 trillion in revenue over a decade, according to an estimate by Alex Brill of the conservative-leaning American Enterprise Institute.”
“Trump wants to bring that money back to the United States to spur jobs and growth, and he’s been aggressively pitching a plan to offer companies a large tax break if they bring all those dollars back to America soon. Under Trump’s proposal, companies would only have to pay a 10 percent tax on money they bring back — a process often called ‘repatriation’ — rather than the usual 35 percent. . . . The [George W. Bush] White House tried this once before, and the results were grim. . . . “
“[Alex] Brill estimated that of all the money saved by local and state taxpayers with this deduction, 89 percent comes from those with incomes of $100,000 or higher. “In other words, the policy itself is highly regressive,” Brill told the Senate Finance Committee in prepared testimony Sept. 14. “It is available only to the minority of taxpayers who itemize their taxes (generally higher-income taxpayers) and is more valuable to taxpayers in higher tax brackets.””
“[Alex Brill] emphasized that Congress’s tax reform timeline should not be dictated by attempts to ‘micromanage the quarter-by-quarter performance of the U.S. economy.’ Still, Brill acknowledged that it’s politically important to prioritize and maintain momentum on tax reform. ‘Moving slowly raises the risk that the process will never conclude,’ he said.”
