State and Local Tax Deduction: Sample County Letter

October 3, 2017

OPEN LETTER TO STATE CONGRESSIONAL DELEGATION

As county elected executives representing STATE counties, we are writing to express our deep concerns with proposals to eliminate deductions for state and local taxes (SALT) as the primary funding offset for federal tax reform. While many have attacked states like STATEin making the case for the elimination, the fact remains that the residents and businesses of STATE contribute far more, in the billions, to the federal Treasury than we receive back in federal aid.

Across the state, more than 1.8million households claimed the SALT deduction in 2015 for a total of $32.24 billion. We are particularly concerned that the loss of the SALT deduction will harm middle class homeowners and overall property values. A recent study by PwC commissioned by the National Association of Realtors found that homeowners with AGI between $50,000 and $200,000 would see an average tax increase of $815 if SALT were eliminated and the standard deduction were doubled.

Without the SALT deduction, our taxpayers would be doubly taxed. Such a policy is contrary to the intentions of our founding fathers and overturns the precedents set in the Civil War income tax imposed by President Lincoln and again in the original federal tax code of 1913. There is a strong rationale why SALT was included as one of the original six federal tax deductions. Simply put, SALT is not a special loophole, but instead a core principle of fiscal federalism that should be preserved now. The deduction for state and local taxes reflects the fact that these are the ONLY mandatory payments by all taxpayers.

As elected officials, we understand and appreciate your challenge of spurring the national economy while balancing the federal budget. We share your goals of being the best stewards of public money and ensuring we have the proper incentives for prudent fiscal management of all taxpayer resources. Unfortunately, the elimination of SALT deductions will negatively impact middle classSTATE– and middle class residents nationwide – with a triple whammy of higher federal taxes, declines in property values and threats to state and local services like K-12 schools, public safety and infrastructure improvements.

We appreciate your consideration of our viewpoints and we respectfully urge you to strongly oppose efforts to eliminate deductions for state and local taxes (SALT) in the pending federal tax reform debate.

Sincerely,