October 22, 2019

Wyden, Senate Dems Will Force Vote To Restore Homeowners’ Ability To Work Around GOP Tax Law’s Harmful SALT Caps

SALT Caps Are Costing Homeowners Tens-Of-Thousands Of Dollars And Undermining Many Other State Tax Credits

Washington, D.C. – U.S. Senator Ron Wyden, D-Ore., today announced that he and fellow Senate Democrats will force a vote tomorrow on a resolution to undo Republican-made IRS rules blocking critical state workarounds to harmful state and local tax (SALT) deduction caps, restoring states’ ability to work around the these caps and allowinghomeowners to again fully take advantage of their SALT deduction.

Wyden and Senate Democratic Leader Chuck Schumer, D-N.Y., and Senator Bob Menendez, D-N.J. will use the Congressional Review Act to force Wednesday’s vote.

 “Donald Trump and Republicans intentionally targeted Democratic states so they could shovel tens of billions of dollars more in tax cuts to the wealthiest individuals and companies in America,” Wyden said. “In blocking efforts to respond to this attack, the Treasury Department wrote broad regulations that hurt the majority of states by effectively eliminating the benefit of their charitable tax credit programs. These include credits that support important priorities like conservation, child care, charitable endowments and access to higher education. Republican senators have been requesting help for constituents who have been harmed by these regulations so they should join Democrats in overturning them.”

Before Trump-era changes to the tax code, taxpayers who itemized deductions on their federal income tax returns could deduct state and local real estate and personal property taxes, as well as either income taxes or general sales taxes. State and local income and real estate taxes had made up about 60 percent of local and state tax deductions while sales tax and personal property taxes made up the remainder. According to the Tax Policy Center, approximately one-third of tax filers had itemized deductions on their federal income tax returns.

While the IRS blocked states' workarounds for families, in September 2018 the Treasury Department issued guidance that had allowed businesses to continue to benefit from these same workarounds. Reversing the IRS’s harmful rule will also preserve the ability of states to maintain their own longstanding local charitable deductions for child care, economic development, education and environmental conservation.