One of the more contentious fights over President Trump's "big beautiful bill" is a bid to raise the state and local tax (or SALT) deduction cap. Tax Foundation CEO and president Daniel Bunn is against raising the cap. He explains why in the video above.
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I want to dig deeper into this SALT cap debate. You say the expanded SALT uh deduction cap is a reversal of good tax policy. Why do you believe restoring a higher SALT cap is a step backwards, and who actually benefits the most from this change?
The folks who benefit the most are very high income taxpayers with very high property tax bills and state income tax bills. And it's a very narrow slice of the population. Uh in fact, what the choice policy makers took in 2017 was the right one. Prior to 2017, a lot of these taxpayers who are currently arguing for a larger SALT deduction saw much fewer deductions available to them because they were stuck with the alternative minimum tax. The 2017 law took away a lot of the hurt of the alternative minimum tax and made the tax law more transparent with this $10,000 SALT cap. So going back on that with a higher SALT cap or by bringing more complicated measures in on itemized deductions would actually be a reversal of the good policies that we saw. In fact, lawmakers should lean more into that broader based, lower rate mentality. Uh and right now it's just a lot of politics around what narrow slices of the population can get some added benefits out of this legislation.
