Trump Revisits State and Local Tax Deduction
Plus, Bernie Sanders moves to halt arms sales to Israel
In December of 2020, after Trump lost the election, I wrote a “Why Trump Lost” column that included a paragraph about taxes: “Mr. Trump ran for re-election on a vague promise of additional tax-cutting, but his corporate tax cuts were paid for in part by a capping of the individual deduction for state and local taxes. That rubbed ‘SALT’ in the wounds of voters in such places as the high-property-tax suburbs of Philadelphia, suburban Atlanta, Arizona.”
Now Trump looks to be revisiting that policy, touting an event on New York’s Long Island: “I will turn it around, get SALT back, lower your Taxes.” At the event tonight, he said, “I will cut taxes for families, small businesses and workers, including restoring the SALT deduction, saving thousands of dollars for residents of New York, Pennsylvania, New Jersey, and other high cost states.”
An October 19, 2005 editorial in the New York Sun backed an end to the federal tax deduction for state and local taxes. The Sun said then, “Certainly an end to the federal deduction will cause New Yorkers to feel more acutely the burden of their state and local taxes, which are among the highest in the nation. But such pain – and the heightened competition between jurisdictions that will come with the elimination of the deduction – can only increase political pressure on state and local government in New York to reduce spending and taxes. As it is, the state and local tax deduction creates a perverse incentive that actually encourages states and cities to increase taxes on the theory that otherwise the money will just end up in Washington.”
The 2017 Trump tax law imposed a $10,000 cap on the deduction. Eventually the New York Times editorial board, which had long favored the deduction, came around, in 2021, to the idea of eliminating it entirely: “The primary beneficiaries are the wealthy people who get a tax break.”
With Trump now backing elimination of taxes on tips, an end to taxes on Social Security benefits collected by senior citizens, and, apparently, restoring the state and local tax deduction, tax policy would move away from simplification and toward complexity. Steve Forbes, a formidable Republican voice on economic policy, observes that Trump might be better off just backing a flat tax.
As tax policy, the deduction for state and local taxes doesn’t have much logic.
As politics, though, it has an appeal for Trump, because it might help him with some homeowners and high-income earners who have seen their state and local tax bills soar in recent years while the $10,000 cap remains fixed.
Some raise concerns about the deficit. But Vice President Harris is out campaigning on her promises to “cut taxes for working families,” offset by new taxes on unrealized capital gains of millionaires and billionaires that may never be enacted. So why shouldn’t Trump offer up his own tax cuts, offset by promises of new tariff revenues that also may not materialize?
It’s better to have the candidates competing over who will be a tax-cutter than over who will do better at increasing taxes. It creates a political context that might eventually allow a President Trump to win over some Democratic members of Congress to his tax legislation, because the Democratic lawmakers have constituents who pay high property and income taxes and who would like relief. And it shows in Trump a healthy ability to learn from and correct an earlier mistake. One can argue the tax-policy fine points and principles. But the politics of Trump trying to deliver not only for voters in low-tax places but also for people in Long Island and Pennsylvania and New Jersey are a sign that for all the fears and talk of Trump’s tyrannical tendencies, he’s deeply engaged right now in the interest-group, constituency-pleasing appeals that are at the heart of democracy. For an autocratic authoritarian, Trump sure is devoted to winning over suburban swing voters. That doesn’t mean he’ll follow through once elected. But there is something about the heat of a presidential campaign that has a way of focusing a candidate’s attention on what voters care about. It might make for less-than-textbook technocratic tax policy, but there’s something to be said for responding to the people, too.
China’s American Hostages: Hundreds of Americans are being held against their will in China, Rep. Chris Smith is warning.
“Despite the release of David Lin, there are more Americans detained in the People’s Republic of China (PRC) than anywhere else in the world,” Smith, a Republican from New Jersey who is chairman of the Congressional-Executive Commission on China, said in remarks prepared for delivery today at a Commission hearing on the issue.
“The Foley Foundation identifies 11 wrongfully detained Americans in China, including those subjected to ‘exit bans.’ John Kamm, the preeminent expert on political prisoners in China, estimates that there are 200 or more American citizens ‘coercively detained,’ with 30 Americans being held in China under ‘exit bans’—where U.S. citizens are stopped from leaving China to settle economic disputes or to coerce their relatives to return to China to face alleged Crimes,” Smith said. “The release of American citizens should be the first thing President Biden says to Communist Party leader Xi Jinping whenever they talk. Their names should be said so often that Xi Jinping has them memorized. Their cases should be agenda item #1 at every meeting the Secretary of State takes with Chinese officials. And, every U.S. official traveling to China should be repeatedly saying the names of Kai Li, Mark Swidan, Nelson Wells, Jr. and Dawn Michelle Hunt.”
Mark Swidan’s mother, Katherine Swidan, said in prepared testimony that her son has been unjustly detained in China for 12 years. She described her son as “a devout Catholic who, even in captivity, has stood up for fellow prisoners when they were abused by Chinese guards. Mark's Bible has been confiscated, and his rosary destroyed, but...he has not lost his faith in God, family, or country.”
Tim Hunt offered testimony about his sister, Dawn, who was arrested in China in 2014 and is now suffering medical problems in Chinese prison.
Nelson Wells Sr. said his son had been unjustly imprisoned in China for ten years. “While in the beginning, we heeded warnings not to shine a public light on Nelson’s story out of fear of retaliation against him, his declining health has forced us to escalate our efforts to share his story and gain attention for him in the hopes of mounting political and public pressure and ultimately diplomatic intervention,” Wells said in prepared testimony.
Peter Humphrey, a British citizen who was wrongfully imprisoned in China from 2013 to 2015 along with his American wife Yingzeng Yu, said he was kept in a one-room cell with no furniture along with 12 other prisoners. “We never received outdoor exercise, sunshine or fresh air. The toilet was a hole in the corner of the cell open to the view of every cellmate and the surveillance cameras,” Humphrey said. “We were allowed only minimalist meetings with defense lawyers, whose hands were tied by a rule that requires all Chinese lawyers to obey the Communist Party or lose their license.”
Sanders aims to block arms for Israel: The socialist senator from Vermont, Bernie Sanders, said today that he will file “joint resolutions of disapproval” aimed at blocking American arms sales to Israel. “We must end our complicity in Israel’s illegal and indiscriminate military campaign, which has caused mass civilian death and suffering,” Sanders said.
Yesterday, speaking to black journalists in Philadelphia, Vice President Harris boasted about withholding arms to Israel: “one of the things that we have done that I am co- — entirely supportive of is the pause that we’ve put on the 2,000-pound bombs. And so, there is some leverage that we have had and used….we are doing the work of putting the pressure on all parties involved to get the deal done.”
A roll call vote on Sanders’s resolution would be a fine opportunity to identify the legislators who favor punishing Israel. I doubt there are many of them, but it’d be a service to smoke them out so that they can get the same treatment that Cori Bush and Jamaal Bowman did.
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We must distinguish between people detained in other countries for acts that violate the law in those countries and those who are clearly hostages held only to extract concessions from their home countries.
For countries that hold true hostages, such as Russia, the USA should discourage all travel to those countries until the hostages are released.
Candidate X drove over a family in Staten Island out of spite but it is far better to have a candidate taking steps to solve the housing crisis rather than just put out policy papers. The cap on SALT deductions was necessary to balance the 2017 tax cuts and both sides should have celebrated the cap. Folks in blue states get nice things from their taxes. The rest of the country shouldn't subsidize.