Twiddling Tax Levers
As a high-tax state with an outsize share of high earners, New York has much to gain or lose when it comes to the federal tax code. The $10,000 cap on deducting state and local taxes on federal income tax filings, a key feature of the 2017 tax cut law, remains a contentious issue.
Donald Trump has promised to restore unlimited state and local tax deductions, known in accounting lingo as “SALT,” which would benefit many New Yorkers. However, this would come at a cost, with the Penn Wharton Budget Model estimating the cost at $1 trillion over 10 years. Democrats have been opposed to the cap since its introduction in 2017 and have promised to reverse it if elected.
Kamala Harris, on the other hand, has been silent on the SALT deduction, but her tax plan would raise federal taxes on households earning more than $400,000, affecting many New Yorkers. Harris’ proposal would preserve the tax cuts for households earning less than $400,000 and raise the top tax rate to 44.6% from 29.6% on regular income. Corporations would see their rate increase to 28% from 21%.
Pushing Back on Poverty
Both candidates have proposed policies to help those lower down the income ladder. Harris is looking to expand access and benefits to a popular child tax credit. Trump, on the other hand, has not made any specific proposals on this issue.
Conclusion
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The upcoming election will have significant implications for New York’s taxpayers. The candidates’ differing views on the SALT deduction, tax rates, and poverty reduction programs will shape the future of tax policy. Will Trump succeed in restoring unlimited SALT deductions, or will Harris’ plans to raise taxes on high earners come to fruition? The fate of these policies hangs in the balance, and only time will tell which candidate will be able to follow through on their promises.
FAQs
Q: What is the SALT deduction?
A: The SALT (State and Local Tax) deduction allows individuals to deduct state and local taxes from their federal income taxes.
Q: What is Kamala Harris’ position on the SALT deduction?
A: Harris has been silent on the issue, but as a Democrat, she would likely seek to reverse the $10,000 cap introduced in 2017.
Q: How would Donald Trump’s tax plan affect New York?
A: Trump’s plan would restore unlimited SALT deductions, benefit high-income earners, and potentially raise taxes on Social Security benefits and eliminate taxes on tips.
