WASHINGTON (PAI)—With Democratic President Joe Biden’s Build Back Better Act still hung up in the Senate, the Teachers (AFT) took the lead in pushing one element: A larger itemized personal income tax deduction for state and local tax (SALT) payments.
“We’re fighting for it,” AFT President Randi Weingarten told an outdoor press conference December 8, “because working families need it.”
“The first tax code in the U.S.A. had state and local tax deductions in 1913. Why? Because they knew then what we should know now: We have a federal system, but services are developed by the states.”
Those services include public schools, whose funding takes a big share of state and local spending. And that money, in turn, comes from individual taxpayers.
But those taxpayers got slammed in the 2017 Trump-GOP tax cut for corporations and the 1%. Openly seeking revenge against “blue” states, GOP Oval Office occupant Donald Trump deleted that deduction, among others. Another deletion: The deduction for union dues.
Then-Senate Majority Leader Mitch McConnell, R-Ky., gleefully agreed. SALT, he said, is a “subsidy” from taxpayers in poorer states, like Kentucky, to those in richer states, like New York. Radical rightists hate SALT because they hate public schools, teachers, and students.
Weingarten has another take, and so do other unions. So do congressional Democrats, in the BBB bill. The Democrats propose increasing the itemized deduction, up to a specific figure, either $72,000 or $80,000, depending on who’s talking. Right now, the Trump-GOP tax law sets a $10,000 limit on combined state, local, and property tax deductions.
“Great schools are paid for by state” taxes and local “property taxes. The (tax) code used to incentivize states and localities to invest in themselves, making sure the middle class wasn’t double taxed. That’s why you had the SALT deduction back to 1913,” said Weingarten.
“This went unchanged until Donald Trump decided to give that money to the rich. So who suffered? Kids. Commuters. Public services. Who pays the price? Middle class. Teachers. Firefighters. All because Donald Trump wanted to give the rich a tax cut.”
But so did congressional Republicans, most of them from rural areas, the South, the Great Plains, the Mountain States, and the “border” states between North and South. Trump played on those states’ taxpayers’ and lawmakers’ resentment of large, urbanized states.
Weingarten said restoring the deduction would aid workers.
“Let’s deliver for the middle class. This is a way of putting the incentive system back in place to invest in localities, in sewer systems, in fire systems, in schools. That’s why we want what the House did in the Senate bill in #BuildBackBetter,” she concluded.
Other unions also support restoring SALT, past statements show.
In its policy recommendations a year ago to the incoming Biden-Harris administration, the National Education Association, the nation’s largest union, voiced a similar point. And in a 2019 legislative conference fact sheet, the Fire Fighters went into the issue in detail.
“State and local tax deductions help state and local governments fund public services that provide widely shared benefits,” NEA’s policy proposals said. “With this deduction in place, higher-income households are more willing to support state and local taxes. Capping the deduction will make it harder for states and localities to raise sufficient revenues in the coming years to fund pre-K–12 and higher education, health care, and other services.
“While the benefits of the deductions accrue the most to those with higher incomes, the revenues from capping the dollar amount of the deductions were used to cut marginal tax rates that disproportionately benefit higher-income individuals at the expense of lower- and middle-income families,” it added.
“Where once a tax filer could fully deduct all state and local income, sales and property taxes, he or she can now only deduct up to $10,000,” IAFF said in part. That limit produced “a drastic increase in the tax liability for filers across the country, while at the same time putting financial stress on municipalities charged with providing necessary public safety services.”
And while SALT foes, like McConnell and Trump, contend the itemized deduction benefits the rich, IAFF countered that.
Some “40% of taxpayers with adjusted gross income between $50,000 and $75,000 claim the deduction while 86% of all taxpayers claiming” the deduction “earn under $200,000 per year. The deduction impacts working-class Americans throughout the country,” IAFF noted. That includes 90% of middle-income taxpayers in Utah and 84% in Texas. It was the sole big “red” state whose taxpayers lost money due to the low limit on the deduction.
“The unfair capping of the SALT deduction results in the double taxation of working-class Americans,” the union said.
And School Administrators President Ernest Logan predicted last year that “our biggest fight will be making sure we have the needed dollars to provide a top-notch education to the children we serve every day.” The SALT deduction helped provide those dollars, unions say.
The fate of the SALT deduction is tied to the fate of Biden’s BBB bill. On December 5, Senate Majority Leader Charles Schumer, D-N.Y., warned colleagues to prepare to work nights and weekends until they finish it. The apparent deadline is just before December 25.
CONTRIBUTOR
Comments