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Democrats Fight for the Wealthy with New Tax Bill

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Senator Robert Menendez, CODEL, Kyiv, Ukraine, Sept. 1, 2014. Photo Courtesy of the US Embassy in Kiev.

Senator Bob Menendez (D-NJ) is pushing a bill with his House colleague Rep. Bill Pascrell (also from NJ), to eliminate the cap on deductions for state and local taxes. The cap has hit wealthy Americans in high tax states like New Jersey very hard. In 2010 Menendez called the GOP Senate negotiators terrorists for attempting to extend the entire Bush tax cut plan, now he’s demanding tax breaks for many of the same people the Republicans were fighting for then.

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Naomi Jagoda of The Hill reports:

Sen. Bob Menendez and Rep. Bill Pascrell, both New Jersey Democrats, introduced legislation last month that would repeal the $10,000 limit on the SALT deduction created by Republicans’ 2017 tax-cut law. The bill would also raise the top individual tax rate from 37 percent to its pre-tax law level of 39.6 percent.

The legislation is co-sponsored by many other lawmakers from high-tax states, including GOP Rep. Chris Smith (N.J.) and three Democratic presidential candidates: Sens. Cory Booker (D-N.J.), Kirsten Gillibrand (D-N.Y.) and Kamala Harris (D-Calif.).

Lawmakers from high-tax, Democratic-leaning states object to the SALT deduction cap because they argue that it unfairly punishes their states, which give more money to the federal government than they get back from it. The lawmakers have also said that some of their constituents are seeing smaller refunds and higher taxes due to the SALT deduction cap.

President Trump has suggested that he’s open to revisiting the SALT deduction cap, but key GOP lawmakers have said they won’t reconsider it. Many Republicans argue that the SALT deduction subsidizes higher state taxes and that blue-state governors should lower their states’ taxes. They also note that the majority of taxpayers in high-tax states are still getting a tax cut under the 2017 law, due to changes such as lower rates and a higher exemption level for the alternative minimum tax.

Read more here.

High tax states are driving away their citizens. New Jersey politicians should focus on ways to lower the tax rates there, rather than attempting to have the federal government subsidize their confiscatory taxation. I’ve written many times about Americans voting with their feet, and heading to low tax states for retirement.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.