Democrats are looking for ways to pay for restoring a special tax break for the wealthy—and it could be by capping charitable donations or eliminating the deduction for 401(k) retirement contributions. This is according to Chris DeMuth, of the Hudson Institute and author of “The Overtaxed Investor: Slash Your Tax Bill and Be a Tax Alpha Dog” writing in the Wall Street Journal.
Restoring SALT tax shelter for the wealthy may hit charities:
“Since repealing the cap on the State and Local Tax Deduction is a valentine to the 1%, adding some limit is likely. Mr. Biden has proposed a 28 percent cap on the tax benefit from itemized deductions. This new cap would squeeze charities by making charitable deductions worth far less.”
Restoring SALT tax shelter for wealthy may hit your retirement:
“The president has also proposed eliminating the deduction for 401(k) contributions and replacing it with a tax credit. That would transport our customary retirement-plan strategies into the upside-down world. To avoid this income redistribution scheme, earners in the 20% brackets and above would have to avoid contributing to a traditional 401(k), while earners below the 20% brackets would have to avoid the Roth 401(k) to grab the credit instead. As certified public accountant Jeff Levine points out, your contribution could end up being taxed twice at the state level: once when deposited, and again when withdrawn.”
Restoring SALT tax shelter for wealthy shows contempt for the American workers:
“After herding us into these [retirement] plans for decades, Congress wants to change the rules to confiscate more of our savings—moving the goal posts exactly as the baby boomers head into retirement. Retirement plans are governed by a set of rules so convoluted they could be sold to Parker Brothers for a board game, yet are coupled with fines of up to half of the money for trivial infractions. This reckless rejiggering of the tax code shows contempt for the American worker.”
More information on the Democrats’ favorite carveout for the wealthy:
Restoring SALT for wealthy families will worsen wealth inequality.
- The liberal Tax Policy Center has said this benefits “high-income households.”
- Senator Bernie Sanders (D-VT) previously opposed efforts to repeal the SALT cap, saying it “sends a terrible message,” and that “you can’t be on the side of the wealthy and powerful if you’re going to really fight for working families.”
- According to one expert, repealing the SALT cap would widen income inequality.
This comes as even liberals are saying President Biden is raising taxes on the middle class and Main Street.
- Even liberals claim President Biden is violating his pledge by increasing taxes on the middle class, according to an analysis by the Tax Policy Center.
- New analysis from the non-partisan Joint Committee on Taxation shows that of the more than 172 million taxpayers who would bear the burden of the increased corporate tax rate, 98.4 percent, or about 169 million, have incomes well under $500,000.
- 66.3 percent of the corporate tax burden would be borne by lower- and middle-income taxpayers.
- U.S. Chamber of Commerce report found that while the majority of the more than 30 million small businesses in the U.S. are pass-through entities in which tax obligations are passed to the owners, 1.4 million of them are organized as C corporations and thus subject to the corporate tax.