Cantwell: Republican Plan to Eliminate State and Local Tax Deductions Will Raise Taxes on Middle Class Families, Make Buying a Home More Expensive
GOP Plan to Eliminate State and Local Tax will mean middle class families will get double taxed; make it more expensive to buy, own a home
A family of four in King County earning $56,600 could face an increase of $1,600 under the Republican tax plan
SEATTLE, WA – Today, U.S. Senator Maria Cantwell (D-WA) called on Republicans in Congress to not raises taxes on Washington families and keep the state and local tax deduction in their tax reform proposal.
“The latest Republican tax reform framework would be damaging for families all across Washington state. Eliminating the state and local tax deduction would be a tax increase for many Washington state families,” said Cantwell. “We need tax reform that invests in our workers, provides relief to families, and takes our innovation economy to the next level.”
The Republican tax proposal would eliminate Washingtonians ability to deduct local sales and property taxes from their federal incoming tax, making in more expensive to own a home and raising taxes on middle class families.
“For the 849,530 Washington residents who annually deduct their property taxes paid from their federal income tax, the loss of this deduction would amount to a significant tax increase and would preclude some potential home buyers from qualifying for a home loan,” said Gary Wright, a real estate broker and member of Washington Realtors.
Under today’s tax code, Americans across the country pay state and local taxes – that includes property and sales taxes in Washington state – in addition to federal taxes. To prevent against being taxed multiple times on the same income, taxpayers are able to deduct that amount from their federal income taxes.
Eliminating the state and local tax deduction would be a tax increase for many middle-income Washington families. A family of four in King County making $56,600 could see their taxes increased by more than $1,600 under the GOP Tax plan. In Washington state, 30% of taxpayers use the state and local tax deduction to lower their federal tax burden and would lose an average deduction of $7,402 if the deduction is eliminated. In addition, nearly 86 percent of taxpayers nationwide who claim the SALT deduction are middle class and have an adjusted gross income under $200,000.
“I'm one of the many taxpayers making under 200k a year who deduct local sales and property taxes from our Federal income taxes. The proposal to eliminate these deductions quite simply means less money for us. Less money for our children's college savings accounts, less for retirement, less savings. It will add up to being about $3,000 a year that we would lose,” said Diana Chinea, a homeowner from Bellevue. “The elimination of the SALT deductions feels like a plan to tax our taxes. It takes money out of our pockets, and I'm not sure why that makes sense.”
The state and local tax deduction has been a fundamental component of our federal tax system since the federal income tax was created in 1913. The deduction was included in that first income tax legislation to prevent double taxation and to ensure support for home ownership, public safety, local school funding, social services, infrastructure development and local job creation. For more information on what the state and local tax deduction means for King County, see the National Association of Countries fact sheet, HERE.
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