On October 19, the U.S. Senate approved a budget blueprint for Fiscal Year 2018 allowing lawmakers to pursue a tax code overhaul through the budget reconciliation process. This process will permit a tax reform proposal to be approved with a simple majority vote in the Senate, rather than the typical 60-vote threshold needed to overcome a filibuster.
The Senate passed the budget resolution by a vote of 51-49 after considering a flurry of amendments to the legislation. The chamber approved one of these amendments introduced by Sen. Shelley Moore Capito (R-W.V.) expressing the Senate’s interest in reducing the state-and-local (SALT) tax deduction to pay for the tax plan.
For counties, the SALT deduction lowers the cost to taxpayers of providing critical public services, including infrastructure, public safety and emergency services. Additionally, eliminating the deductibility of state and local taxes would represent a double tax on constituents that would significantly impact local middle-class home owners with an increased burden on funding key local priorities.
Americans Against Double Taxation, a coalition comprised of state and local government organizations, service providers and other stakeholders dedicated to protecting SALT deductions, released information last week showing homeowners in high-SALT congressional districts would face significant tax increases if the SALT deduction was eliminated.
The Senate’s budget blueprint differs significantly from the House version passed earlier this month, especially in terms of how to pay for the tax plan. The Senate bill would allow tax cuts to add $1.5 trillion to the national deficit, whereas the House bill includes cuts and other changes to help balance the budget. While both chambers usually work toward a compromise version of the budget, House lawmakers may simply accept the Senate’s budget resolution to expedite consideration of tax reform legislation.
NACo will continue to monitor tax reform efforts and advocate for key county priorities, including the SALT deduction, as the process moves forward.
For more information or resources, please reach out to Jack Peterson, NACo Associate Legislative Director, at firstname.lastname@example.org or (202) 661-8805.
- Click here to view county-by-county SALT profiles.
- Click here to view state-by-state SALT profiles.
- Click here to view our SALT one-pager.
- Click here to view a Myths-vs.-Facts sheet on SALT
- Click here to read more about tax reform.
- Click here to view AADT’s resource page, and here to view the tax impact calculator