On Jan. 29, Rep. Mondaire Jones, who was elected in November to serve New York’s 17th Congressional District, announced the SALT (State and Local Tax) Deductibility Act, which seeks to remove the $10,000 cap on state and local tax deductions.
Referring to the package of federal tax changes passed in December 2017, he said, “Donald Trump cut taxes for billionaires and big corporations and paid for it on the backs of hardworking families in Westchester and Rockland counties, where we pay the highest property taxes in the entire nation,” Congressman Jones said. “That must change. Restoring the SALT deduction is a necessary first step to creating an equitable tax system — one where we put money back in the pockets of working people.”
Jones signed onto the bill, which was introduced to Congress Thursday, Jan. 28, by Rep. Thomas Suozzi and Senate Majority Leader Chuck Schumer, who are both New York Democrats.
On Dec. 22, 2017, former President Donald Trump signed the Tax Cuts and Jobs Act into law, which resulted in a $10,000 cap on state and local tax deductions affecting people living in high-tax states with high property values.
“When it comes to SALT, if you think Westchester and Rockland families needed and deserved this money before the coronavirus took hold, the stakes are even higher now because the cap is costing this community tens of thousands of dollars they could be using amid the crisis,” Sen. Schumer said.
Jones’ district includes portions of Westchester and Rockland counties.
The federal tax law changes passed in 2017 drew local supporters as well as critics, with backers seeing the measures as providing new incentives for strong future economic growth. In addition to capping deductions for state and local taxes as well as for mortgage interest, other provisions included reducing tax rates for businesses and individuals, and increasing the standard deduction.
The SALT Deductibility Act would once again allow New Yorkers to fully deduct their state and local taxes from their federal taxes. If passed, the changes would benefit many residents of local municipalities in Westchester, including Scarsdale and Edgemont.
The proposed bill would not necessarily benefit people at lower income levels because the value of the deductions for state and local state tax deductions are worth less for those reporting lower incomes. Residents with higher incomes and larger state and local tax bills would have the most to gain from repealing the deduction cap.
Assemblywoman Amy Paulin, who represents Scarsdale, and several other Democratic officials at the federal, state and county levels, commented in favor of Jones’ proposed bill, including Sens. Kirsten Gillibrand and Shelley Mayer, and Westchester County Executive George Latimer.
“The full restoration of the SALT deduction, as proposed by Rep. Jones, would restore fairness to New Yorkers and eliminate the unjust system of double taxation imposed by the cap,” said Paulin. “It is critically important that we repeal the Act and provide tax relief to New Yorkers right now — at a time when they need it the most.”
Gillibrand criticized the 2017 limit on SALT deductions as “a cynical policy passed by Republicans as a way to repay wealthy donors and lobbyists with big corporate tax cuts.”
Several officials also accused backers of the measure of targeting communities like Westchester.
“This federal tax law is not only double taxation, but it also unfairly targets communities like Westchester County — and every homeowner in this county is a victim,” Latimer said. According to a report by CBS News in April 2019, Westchester County was ranked as the U.S. county with the highest property taxes at an average of $17,392.
With the average home valued at $691,392 in Westchester, Latimer said, “Our homes are our greatest asset, and this cap is a hit to our wallet” and should be repealed.
At the state level, Paulin has introduced legislation in the Assembly that would make the full SALT deduction available to partnerships and other pass-through entities. Second, for individual residents, Paulin has a lawsuit pending against the IRS, in which Scarsdale is the plaintiff. The suit defends a law she authored and passed in 2018, which allows individuals to contribute to certain school and other reserve funds and take the full SALT deduction for those donations.
“I am hopeful that we will win this suit and that the IRS will issue new regulations that would provide the tax relief that New Yorkers need and deserve … at a time when they need it the most,” Paulin said.
— With reporting by Valerie Abrahams