In 1985 and 1986, Congress denied President Ronald Reagan one of his major tax reform goals: repealing state and local tax (SALT) deductions. This Congress finally has the opportunity to fulfill one of Reagan’s remaining goals.
Let’s win one for the Gipper.
REAGAN: “Now, I know that many are concerned about our proposed elimination of the State and local tax deduction. Well, the first point to make here is an argument for fairness–and I have a hunch that maybe somebody here’s already made this argument—but only about one in three itemize their deductions and get the benefit of that deduction. There can be no justification for a preference that gives the wealthiest—one taxpayer in three—a rebate on local taxes while its less fortunate members—or neighbors pay a full dollar locally plus higher Federal taxes in order to fund that rebate. Recently, too, I heard some good news from my home State of California. Now, California is generally considered one of the high-tax States and so, according to the prevailing wisdom, would have the most to lose from the loss of deductibility. The Los Angeles Times has reported, however, that the State Franchise Tax Board has completed a study, finding that Californians would dramatically benefit under our new plan. In the end, all America will benefit from this fairer, pro-growth tax plan. In the words of Democratic Governor Michael Dukakis of Massachusetts, ‘If my taxpayers are better off, particularly my middle-income taxpayers are better off under this plan, that’s really the issue, isn’t it?’”