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House of Representatives
Session of 2017 - 2018 Regular Session

MEMORANDUM

Posted:	November 9, 2017 02:32 PM
From:	Representative Anthony M. DeLuca
To:	All House members
Subject:	Stop Congress from Eliminating the State and Local Tax Deduction (SALT)

In the near future I will be introducing a resolution memorializing Congress to leave the State and Local Tax (SALT) deduction intact. The deduction is under consideration for elimination by Congressional majority leaders as part of a six trillion dollar plan yet unveiled and being formulated without any hearings or bipartisan input. Eliminating this deduction will pay for tax cuts catering to the most affluent, with 80 percent of the net cuts going to the top one percent of Americans, according to the Tax Policy Center. Nationally, SALT is the most popular deduction for those who itemize their taxes: of 44 million households who itemize, almost 43 million utilize it. The deduction is effectively a form of revenue sharing between the federal government and state and local governments that has existed for over 100 years. This cooperation is fundamental to the way states and localities budget for and provide essential services and helps to ensure stability with their finances. Pennsylvania would stand to lose more than most states in this proposal. Close to two million Pennsylvanians use this deduction, or nearly one-third of all filers, however some counties participate on a significantly higher level. For example, Chester residents file at a rate of 46 percent, Montgomery at 45 percent, and Bucks 43 percent. Data from the IRS shows that almost $20 billion was claimed in deductions by Pennsylvanians for property, income, and sales taxes, with an average deduction of $11,200. The deductions that are allowed for property taxes, along with the deduction on mortgage interest provide a strong incentive for individuals to seek homeownership. The sales tax deduction provides similar incentives for encouraging consumer spending, which in turn spurs economic growth. If SALT were repealed, taxpayers would be less likely to support current state and local tax levels, because they could claim no such exemptions. This in turn would pressure tax levels down and, as a result, states and localities already struggling to appropriately fund critical programs would be struggling even more than they do now. With an elimination of the SALT deduction, states and local governments would likely find it more difficult and expensive to borrow money because rating agencies look negatively at actions that can make it harder for states to raise revenue when necessary. This strain would ultimately result in cuts to state and local services including reductions in education, and also infrastructure spending, and in general would jeopardize paying for the fundamentals of thriving communities. Please join me in asking Congress to keep these all important parts of our tax code intact.

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