On Tuesday, July 11 the National Association of Counties (NACo) cohosted “Protecting Local Control in Our Tax Code – A Briefing on the State and Local Tax Deduction” on Capitol Hill, along with our Big 7 state and local organization partners, the National Governor’s Association, the National League of Cities, the National Conference of State Legislature, the U.S. Conference of Mayors, the Council of State Governments, and the International City/County Managers Association. The hill briefing served as a “101” to Congress on the importance of the state and local tax (SALT) deduction.
Will County, Ill. Board Member Mike Fricilone spoke on behalf of NACo, highlighting the importance of Congress retaining the SALT deduction: “If the SALT deduction is eliminated, our constituents will be directly impacted, and they will look to us for tax relief. The cost would simply be shifted down to the local level, where any reduction in local revenue would come with an equal reduction of vital services.” Fricilone added that Will County residents, especially middle class families, simply “can’t afford to suddenly be double taxed on their income.”
The SALT deduction allows taxpayers to deduct state and local taxes paid from their federal taxable income. Deductibility of these taxes prevents double taxation, since state and local taxes are mandatory payments. State and local government deploy revenues from state and local property, income and sales taxes to finance infrastructure projects, local law enforcement, emergency services, education costs and many other services. Eliminating or capping federal deductibility for state and local property, sales and income taxes would represent double taxation on American taxpayers, a principle strongly rejected throughout the tax code.
At the briefing, the Government Finance Officers Association (GFOA) released a new report analyzing the impacts of repealing the SALT deduction on every congressional district across the country. The report allows both constituents and members of Congress to understand the costs of repealing the deduction.
Leadership in Congress has been working on comprehensive tax reform for nearly a year, and the administration said it hopes to produce a plan for hearings and markups by September. Recently, Vice President Mike Pence and House Speaker Paul Ryan expressed optimism that Congress will deliver a tax reform package to President Trump’s desk before Thanksgiving. Congress also must tackle a number of other issues, including health care and appropriations, which could delay tax reform efforts.
- GFOA report on SALT: click here
- NACo’s SALT one-pager: click here
- State and local groups’ letter on preserving the SALT deduction: click here