In a show of unity from across the nation, state legislators from 37 states signed a letter by the American Legislative Exchange Council (ALEC) to Congress urging the elimination of state and local tax (SALT) deductions and passage of real tax reform. The state legislators represent millions of constituents from all corners of the country, including high-tax states such as Maryland, Pennsylvania and Minnesota. The letter to Congress states:
Dear Member of Congress:
States desperately need a return to robust national economic growth in addition to fiscal discipline on the spending side of the ledger. Eliminating the state and local tax (SALT) deduction would provide upwards of $1.5 trillion over the next decade to implement broad-based tax cuts nationally. This overhaul would spur the growth in economic output needed to jolt business investment, personal income growth, and job growth.
In addition to being a roadblock to broad federal tax reforms, the SALT deduction partially shifts the costs of mismanagement elsewhere. Thanks to SALT, income earners and businesses in lower-taxed states pay a higher effective federal income tax rate than their high-taxed counterparts since they deduct less from their taxable income. In effect, citizens in more fiscally responsible regions subsidize the malfeasance of politicians thousands of miles away.
Adding to the innate unfairness of the current SALT deduction, only a small fraction of those paying state and local taxes realize any federal tax benefit from the deduction. Only 30 percent of tax filers itemize at all for the simple fact that individuals must choose between the “standard deduction” of either $6,300 or the total of all other allowable deductions. In other words, all workers pay state and local taxes; but only the minority of workers who itemize deductions see a partial “refund” of those taxes paid. A far lower percentage of middle-class workers itemize compared to their higher-earning counterparts. As a result, the SALT deduction operates very similarly to a regressive tax by rebating a relatively higher portion of state and local taxes as one earns more income. Lowering the tax rates on all by eliminating the SALT deduction will benefit all Americans—wealthy and poor alike—by incentivizing the investments in business enterprises and technology needed to accelerate national economic growth.
For many taxpayers outside of the high-tax locales, the savings from lower federal rates will outweigh the loss of the federal deduction even without positive changes at the state and local level. Abolishing SALT would force residents to take a much harder look at their state and local tax rates. Especially in the highest taxed states, the loss of the deduction will increase community demands for more responsible management of government resources. But even taxpayers in high-tax areas disproportionately benefiting from the existing SALT deduction will benefit from its elimination. The larger tax base resulting from accelerated growth will alleviate some of the impetus for higher state and local rates.
The hardworking men and women of America need pro-growth tax reform to ensure a healthy economy in the months and years ahead. Incentivizing investment and business expansion by lowering the penalty on success (the income tax) produces far more growth than subsidizing state and local government spending through the SALT deduction. For these reasons, we support efforts to eliminate the state and local income tax deduction in exchange for lower federal income tax rates across the board.
The state legislators listed below come from all regions of the country and represent millions of people.
Alabama
Representative Jack Williams
Arizona
Senate President Steve Yarbrough
Senator Sylvia Allen
Senator John Kavanagh
Senator Debbie Lesko
Senator Warren Petersen
Representative Benjamin Toma
Representative Mark Finchem
Representative Vince Leach
Councilman Sal DiCiccio, Phoenix
Arkansas
Representative Karilyn Brown
Colorado
Senator Kevin Lundberg
Representative Susan Beckman
Representative Lori Saine
Representative Dave Williams
Connecticut
Representative John Piscopo
Florida
Representative Ralph Massullo
Representative Mike Hill
Representative Neil Combee
Georgia
Representative Matt Dollar
Representative Bruce Williamson
Hawaii
Representative Gene Ward
Idaho
Senator Steve Vick
Representative Eric Redman
Representative Jeff Thompson
Indiana
Senator Brandt Hershman
Senator Mike Young
Senator Jim Buck
Senator Mark Messmer
Senator Luke Kenley
Representative David Wolkins
Representative Sean Eberhart
Representative David Frizzell
Representative Mike Speedy
Representative Woody Burton
Representative Heath VanNatter
Representative Gregory Steuerwald
Councilman Brian Jessen
Councilman Fred Glynn
Iowa
Representative Rob Taylor
Kansas
Senator Mary Pilcher-Cook
Senator Ty Masterson
Senator Gene Suellentrop
Representative John Barker
Kentucky
Senator Ernie Harris
Representative C. Wesley Morgan
Maine
Senator Andre Cushing
Representative Trey Stewart
Representative Matthew Harrington
Representative Nathan Wadsworth
Maryland
Senator Robert Cassilly
Senator Gail Bates
Delegate Ric Metzgar
Delegate Susan Krebs
Michigan
Senator Phil Pavlov
Representative Michael Webber
Representative Tim Kelly
Minnesota
Senator Mary Kiffmeyer
Senator Roger Chamberlain
Representative Sondra Erickson
Representative Cindy Pugh
Representative Pat Garofalo
Mississippi
Senator Josh Harkins
Speaker Phil Gunn
Missouri
Senator Wayne Wallingford
Senator Ed Emery
Representative Donna Lichtenegger
Representative Charlie Davis
Representative Cody Smith
Representative Kurt Bahr
Representative Justin Hill
Representative Keith Frederick
Representative T.J. Berry
Representative Bruce DeGroot
Representative Nick Schroer
Representative Scott Fitzpatrick
Representative Jered Taylor
Montana
Senator Roger Webb
Nebraska
Senator John Lowe
Senator Jim Smith
New Hampshire
Senator Gary Daniels
Representative Jesse Edwards
Representative Ken Weyler
New Mexico
Representative Yvette Herrell
North Carolina
Representative Jason Saine
North Dakota
Representative Craig Headland
Representative Karen Rohr
Ohio
Senator Lou Terhar
Senator Bill Coley
Speaker Cliff Rosenberger
Representative Gary Scherer
Representative Tom Brinkman
Representative Andrew Brenner
Representative Andy Thompson
Representative Wes Goodman
Representative Bill Seitz
Representative Ronald Young
Representative Wes Retherford
Councilman Ethan Reynolds
Oklahoma
Representative Kevin Calvey
Pennsylvania
Senator Richard Alloway
Representative Brian Ellis
Representative Eric Nelson
Representative Seth Grove
Representative Stan Saylor
South Carolina
Representative Garry Smith
Representative Alan Clemmons
South Dakota
Representative John Mills
Representative Taffy Howard
Representative Hal Wick
Representative Tim Goodwin
Senator Jim Stalzer
Tennessee
Senator Brian Kelsey
Senator Bill Ketron
Representative Martin Daniel
Representative Dan Howell
Texas
Representative Ron Simmons
Representative Kevin Roberts
Representative Rick Miller
Collin County Judge Keith Self
Utah
Senate President Wayne Niederhauser
Senator J. Stewart Adams
Representative Brian Greene
Virginia
Speaker Bill Howell
Delegate Kathy Byron
Councilman Jon Russell
West Virginia
Delegate Kelli Sobonya
Delegate Eric Householder
Delegate Gary Howell
Wisconsin
Senator Leah Vukmir
Senator Alberta Darling
Senator Devin LeMahieu
Representative John Nygren
Representative John Macco
Representative Mike Kuglitsch
Wyoming
Senator Jeff Wasserberger
Representative Dan Laursen
Representative Donald Burkhart
Representative Timothy Hallinan
Representative Danny Eyre
Councilman Dicky Shanor
