After the New York Times reported that Speaker Pelosi sees a “wonderful opportunity” to cut taxes for the top 1 percent of households by repealing the cap on the SALT deduction, experts across the political spectrum swiftly panned the idea. Democrats held up phase 3 negotiations because they saw it as “a tremendous opportunity to restructure things to fit our vision…”

Politico: Economists pan Pelosi’s proposal to lift cap on state and local tax deductions in next bailout

“Such a change would definitely be a windfall mostly for top earners, experts say. And lifting the limits retroactively, as Pelosi has suggested, would only make matters worse, while not offering many benefits to state governments that are also getting hammered by the current crisis.

“’This is not a good idea,’ said Michael Linden, executive director of the progressive Groundwork Collaborative. ‘It would not help the economy heal, and it would not benefit the people who need help.’”

Wall Street Journal Editorial Board: Pelosi Pitches a Blue-State Bailout

“Democrats have been trying to repeal the SALT cap since tax reform passed. They’ve tried lawsuits, state-level accounting gimmicks and acts of Congress. The last House bill repealing the SALT cap passed in December 2019 but didn’t go anywhere in the Republican-controlled Senate. Mrs. Pelosi may be hoping that in an election-year crisis atmosphere the upper chamber would have no choice.

“Blowing up the state and local tax deduction would reduce the tax base and increase pressure for higher tax rates. It would also make it easier for poorly governed states to rely on soaking their high earners through capital-gains and income taxes, because the federal deduction would ease the burden.”

Center for American Progress:

“[Y]ou could target it to truly middle-class people. The problem is, relatively few middle-class people claim SALT. … [this] doesn’t strike me as the most effective way of targeting economic stimulus.” – Seth Hanlon, Senior Fellow

Tax Foundation: Retroactive SALT Repeal Combines Weak Stimulus with Bad Tax Policy

“A retroactive repeal is the worst of both worlds… It increases the probability that bad tax policy will be made permanent without the certainty to even allow the potential side-benefits to real estate markets and state and local government to materialize.” – Karl Smith, Vice President of Federal Tax and Economic Policy

Americans for Tax Reform: Pelosi’s Proposed SALT Cap Repeal Would Do Nothing to Address Coronavirus Pandemic or Help Middle Class

“Even progressive leaning groups and lawmakers have criticized proposals to raise the cap.

“For instance, the left leaning Center for Budget and Policy Priorities has stated that this proposal would be ‘regressive and costly.’ The Center for American Progress has stated that repeal of the SALT cap ‘should not be a top priority’ as it would ‘overwhelmingly benefit the wealthy, not the middle class.’

“In addition, Senator Michael Bennet (D-CO) recently criticized efforts to repeal the SALT cap noting that it runs counter to Democrat ideals: ‘We can say we’re for a progressive tax bill and for fighting inequality, or we can support the SALT deduction, but it’s really hard to do both of those things.’”

New York Post Editorial Board: “Does Nancy Pelosi Know About the Coronavirus Outbreak?”

“…[H]er idea has nothing to do with boosting the economy and everything to do with helping Dems in blue states, like California, New York, New Jersey and Illinois. More than half the benefits of a repeal would go to folks making more than $1 million.”

Business Insider: Nancy Pelosi’s idea to retroactively lift the limit on state and local tax deductions would be almost useless for people who need the most help

“Yet that measure would do almost nothing for most people catching the economic brunt of the virus’ fallout, like hourly workers. Instead, the tax cut would shower wealthier households with additional cash to spend.

“The Committee for a Responsible Federal Budget found in an analysis last year that repealing the SALT cap would primarily benefit millionaires with a tax cut of nearly $60,000 per year.”

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