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Dems Ignore Solid Revenues in Push for State/Local Bailouts, SALT Cap Repeal

December 18, 2020

Key Points:

-Many Democrats and other analysts argued back in the spring that the cap on tax deductions for state and local taxes, combined with headwinds from the pandemic, would cause revenues to decline by hundreds of billions of dollars by this point. Those predictions fell far short.

-Revenues collected by local and state governments dipped only one percent in 2020 compared to the previous year, according to new data released by the U.S. Census Bureau.

-Revenues from local government increased by over $30 billion while revenues from state governments dropped by only 4.4 percent.

-Such news demonstrates that calls for bailouts for states and local governments, or a repeal of the SALT cap, aren’t based on the facts and data.  


According to the nonpartisan Tax Foundation, ten states saw an increase in state revenue throughout 2020. Nine states saw significant losses, due in large part to energy prices taking a global hit.

This data shows that in the first quarter in 2020, aided by a strong foundation established under the Tax Cuts and Jobs Act—signed into law three years ago this month—that states were flourishing. The Tax Foundation finds that “strong revenue growth” was being felt across the country.

While the pandemic presented myriad economic and health challenges, states are rebuilding their economies swiftly. “Consumption—and the related tax revenue—has returned to its pre-pandemic trajectory. At the same time, income taxes, while down, are performing relatively well,” according to the Tax Foundation.

Challenges remain ahead, especially for states reliant on the energy sector. Which is why Congress must focus on passing targeted relief soon. As Ways and Means Republican Leader Kevin Brady (R-TX) told CNBC’s “Squawk Box” this morning, we must continue to build on the successes of the Tax Cuts and Jobs Act to rebuild our economy.