Days after mingling with wealthy donors in Beverly Hills and the Bay Area, former President Trump said that if re-elected, he would reinstate tax cuts that benefit residents of high-tax states such as California.
The cap on the federal deduction for state and local taxes (SALT) was a controversial part of President Trump's 2017 tax reform in states with high taxes and high property values, such as California, New Jersey and New York, where the former president is scheduled to hold rallies on Wednesday.
“I will turn things around, bring back the salt, lower taxes, and much more.” Trump wrote on Tuesday. “I will work with the Democratic Governor and Mayor to secure the funding to get New York back on track,” he said on his social media platform, TruthSocial. [it] We hadn't seen each other for 50 years.”
Eliminating the cap is one of several tax proposals recently put forward by the former president, including not taxing Social Security, tips and overtime income for certain workers.
While the SALT proposal is unlikely to dramatically change the outcome of presidential elections in the Democratic-majority states most affected by the $10,000 tax deduction cap, it could be a factor in key congressional elections that will determine which party controls the House of Representatives in areas like Orange County and Long Island.
“Donald Trump took your SALT. [deductions] “And hurt so many families on Long Island,” Senate Majority Leader Charles E. Schumer, R-N.Y., wrote in response to Trump's post about X. “Now he's coming to Long Island and pretending to support SALT. It's not going to work.”
Removing the cap would also please the former president's donors. On September 12, Trump headlined an evening fundraiser in Beverly Hills, where the top tickets cost $250,000 a pop.
President Trump's 2017 Tax Cuts and Jobs Act, which slashed corporate taxes and lowered individual tax rates while capping previously unlimited state and local tax deductions, immediately sparked controversy in the nation's most valuable real estate regions and created strange alliances between Republican and Democratic lawmakers in those states.
Nearly two-thirds of the benefits of lifting the cap would go to the top 1% of taxpayers, according to an analysis by the left-leaning Institute on Taxation and Economic Policy.
Still, many of those affected by the cap, including in California, are middle-class workers: More than 6 million Californians claimed the credit in 2015, reducing their federal taxable income by an average of $18,438, according to the Urban-Brookings Tax Policy Center.
The SALT cap “is a legislative middle finger to middle-class families in our community,” Rep. Mike Garcia (R-Santa Clarita) said at a town hall meeting in his district in August. “It's a disservice to the blue state where I live.”
The contest between Garcia and Democrat George Whitesides to represent northern Los Angeles County will be crucial in determining whether Republicans can maintain their slim majority in the House.
On his campaign website, Whiteside wrote: support Expand the SALT deduction.
Garcia has long argued that lifting the deduction cap is not an option. His top priorityHe is the vice-chair of the House SALT Caucus. Bipartisan Group Other California lawmakers who oppose the cap include Rep. Young Kim (R-Anaheim Hills), Rep. Anna Eshoo (D-Menlo Park), Rep. Katie Porter (D-Irvine), Rep. Jimmy Panetta (D-Carmel Valley Village), Rep. Julia Brownlee (D-Westlake Village), Rep. Judy Chu (D-Monterey Park), Rep. Ted Lieu (D-Torrance), Rep. Jimmy Gomez (D-Los Angeles), and Rep. Michelle Steele (R-Seal Beach).
Garcia praised President Trump's 2017 tax overhaul as a “pro-growth bill” that would benefit families, but said the state and local tax deduction cap, which was put in place “to help pay for some of those costs,” “is terrible for us as Californians and New Yorkers.”
Governor Garcia has introduced the SALT Fairness Act in 2021 and 2023, which aims to eliminate the cap entirely. Neither version was published. A member of the House Ways and Means Committee, Panetta and Steele co-sponsored the bill in 2021.
Rep. Josh Gottheimer (D-N.J.) noted that President Trump has previously hinted at lifting the cap.
“President Trump gutted SALT and raised taxes on hardworking middle class New Jersey families,” Gottheimer wrote on X on Tuesday. “Now he's saying he wants to fix a problem he created? Without giving any specifics? Sounds like an arsonist volunteering for the fire department.”
