The $ 10,000 SALT cap lifting could be paid for through tax audits, the Democrat suggests

Rep. Josh Gottheimer, DN.J., walks down the steps of the house in the Capitol.

Bill Clark | CQ Appeal, Inc. | Getty Images

The lifting of the $ 10,000 cap on state and local tax deductions known as SALT could be paid for through increased IRS audits, says Rep. Josh Gottheimer, DN.J.

Ensuring so-called tax evaders pay their fair share could also help fund portions of President Joe Biden’s $ 2.25 trillion infrastructure plan, he said.

“In a letter I’ll send to the Treasury Secretary this week, I believe and I will argue that we can pay both by filling in loopholes and investigating all the tax evaders who aren’t paying what they should.” Gottheimer said during a press event on Monday.

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The $ 10,000 cap on state and local tax deductions from former President Donald Trump’s 2017 tax bill has hit certain states with high cost of living and high taxes the hardest, coinciding with left-wing areas.

Gottheimer recently founded the non-partisan SALZ caucus together with a group of House Democrats and Republicans from high-tax countries to remove the upper limit. The group has stated that it will not support an infrastructure plan that does not include lifting the SALT cap, which may be a catch in the package’s road to law.

How do I pay for Biden’s infrastructure plan?

The problem is that the SALT cap helps fund Biden’s infrastructure plan, a comprehensive package that includes funding for transport infrastructure as well as affordable housing, care for the elderly and disabled, better access to broadband and professional training.

In the first year the cap was introduced, the federal government raised $ 77.4 billion from the measure, according to the impartial mixed tax committee. If the cap were removed, it would cost $ 88.7 billion in 2021 and more in subsequent years, the committee said.

The White House, therefore, hesitated to support lifting the SALT cap and tasked those who wanted to reinstate the full trigger to find a way to pay for it.

Gottheimer’s proposal to pay for the SALT cap abolition targets the tax loophole, which could be as high as $ 1 trillion a year on a Senate panel last week, according to IRS Commissioner Chuck Rettig. That figure is much higher than the $ 441 billion a year that the IRS estimated was undid between 2011 and 2013.

“We need the support of the administration and increased investments for the enforceability of our current tax laws and help to close this massive tax loophole,” said Gottheimer. “In other words, there is a way to do this by actually striving for what people already owe.”

Gottheimer also endorsed laws that would close the tax loophole proposed by Representative Ro Khanna, D.-Calif. Khanna estimates his bill would fetch $ 1.2 trillion in a decade by stepping up exams on large corporations and high earners.

While restoring the full SALT deduction is important in states with high taxes and high cost of living, data shows that doing so would not help most Americans.

The top 20% of earners would get more than 96% of the benefits of a SALT waiver, and the top 1% of all earners would get 57% of the benefits, according to the Tax Policy Center. The same analysis found that only 9% of American households would benefit from lifting the SALT cap.

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