Schumer and Gillibrand launch new push to permanently restore NYS’s full salt deduction

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From the office of Senator Charles Schumer:

Today, U.S Senate Majority Leader Charles Schumer and U.S. Senator Kirsten Gillibrand introduced legislation in the new Congress to eliminate the $10,000 cap on the State and Local Tax (SALT) deduction starting in 2021. The proposal would allow taxpayers to fully deduct their state and local taxes on their federal income returns. In 2017, the deduction was capped at $10,000 and resulted in a tax increase for many middle-class families.

“When it comes to SALT, New York 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,” said Senator Schumer. “That is why I am proud to be leading this legislation to restore our full SALT deduction. Double taxing hardworking homeowners is plainly unfair; We need to bring our federal dollars back home to the to cushion the blow this virus—and this harmful SALT cap—has dealt so many homeowners and families locally.”

“I am proud to join my colleagues to introduce legislation to repeal the cap on the State and Local Tax deduction, a cynical policy passed by Republicans as a way to repay wealthy donors and lobbyists with big corporate tax cuts,” said Senator Gillibrand. “The reinstating of the SALT Deduction will ensure that New York families have more money in their pockets, get much-needed tax relief and will once again be treated fairly.”

Schumer and Gillibrand pointed to the following reasons for why the SALT deduction is unfair to New Yorkers:

·        New Yorkers already subsidize other states by paying $36-45 billion more in taxes than we receive back from the federal government;

·        The repeal of the SALT deduction results in double taxation by imposing federal taxes on the income used to pay state and local taxes;

·        The elimination of the deduction drives wealthier people to other states and leaves middle- and lower-income taxpayers holding the bag to pay for school, police and other essential state and local tax burdens.

The below breakdown, based on 2017 data, shows just how critical the full deduction was to New York homeowners.

Congressional DistrictPercentage of Taxpayers Using SALT deductionAverage SALT deduction
1641%$28,984
1748%$28,602
1843%$20,682
1933%$14,320
2034%$16,446
2123%$11,477
2223%$12,275
2322%$12,787
2430%$13,505
2533%$14,334
2624%$12,208
2733%$14,096
NEW YORK
CountyAverage SALT DeductionNumber of Households Claiming SALTPercent of Middle Income SALT Beneficiaries
Westchester$36,263232,50070%
Rockland$22,24967,40080%
Putnam$19,10525,90082%
Saratoga$19,05045,34085%
Albany$17,00251,74086%
Columbia$16,7279,68087%
Thompkins$16,22413,08083%
Orange$15,75572,65087%
Dutchess$15,66259,66086%
Ontario$15,60417,16087%
Monroe$14,549121,83088%
Onondaga$14,46072,19088%
Madison$14,3338,83089%
Ulster$14,08030,83090%
Steuben$13,8429,37088%
Warren$13,8019,70089%
Erie$13,656130,65088%
Schenectady$13,04226,29091%
Essex$12,7334,05090%
Broome$12,66620,41089%
Sullivan$12,56310,39092%
Rensselaer$12,44025,57091%
Chemung$12,1888,71089%
Yates$12,1482,30090%
Oneida$11,89323,70091%
Tioga$11,8935,45092%
Livingston$11,7807,81093%
Cortland$11,6894,78093%
Greene$11,5836,62092%
Otsego$11,3825,73089%
Niagara$11,29426,85093%
Cattaraugus$11,2465,70092%
Oswego$11,17112,60092%
Allegany$11,1693,23094%
Clinton$11,1318,25092%
Schuyler$11,0291,84092%
Delaware$10,9814,16093%
Cayuga$10,9798,61093%
Schoharie$10,9773,58094%
Wayne$10,93511,87094%
Herkimer$10,8295,10093%
Jefferson$10,8248,94092%
St. Lawrence$10,8038,27092%
Seneca$10,7743,25093%
Chautauqua$10,72510,10092%
Chenango$10,5223,93093%
Franklin$10,4383,29092%
Montgomery$10,3324,73094%
Fulton$10,2835,22093%
Hamilton$10,18365092%
Genesee$10,1566,84094%
Washington$9,9736,72095%
Wyoming$9,8714,06094%
Orleans$9,5893,79095%
Lewis$9,2182,26093%

*Middle-income is defined for these purposes as households making less than $200,000 per year.

Under the pre-Trump tax code, taxpayers who itemized deductions on their federal income tax returns could deduct state and local real estate and personal property taxes, as well as either income taxes or general sales taxes. State and local income and real estate taxes had made up approximately sixty percent of local and state tax deductions while sales tax and personal property taxes made up the remainder. According to the Tax Policy Center, approximately one-third of tax filers had itemized deductions on their federal income tax returns.

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