Buttigieg proposes undoing SALT deduction cap

Buttigieg proposes undoing SALT deduction cap
© Getty Images

Democratic presidential candidate Pete ButtigiegPete Buttigieg'Biff is president': Michael J. Fox says Trump has played on 'every worst instinct in mankind' Buttigieg: Denying Biden intelligence briefings is about protecting Trump's 'ego' Biden's win is not a policy mandate — he should govern accordingly MORE on Monday called for undoing a provision in President TrumpDonald John TrumpBiden adds to vote margin over Trump after Milwaukee County recount Krebs says allegations of foreign interference in 2020 election 'farcical'  Republicans ready to become deficit hawks again under a President Biden MORE's tax-cut law disliked by many residents of high-tax states, ahead of the Super Tuesday primaries that include California.

Buttigieg, the former mayor of South Bend, Ind., is proposing removing the $10,000 cap on the state and local tax (SALT) deduction for households earning less than $400,000.

"Removing the SALT cap for families undoes Trump’s politically motivated tax increase and enables governors and mayors across the country to enact progressive tax policies," Buttigieg's campaign said in a news release.


Republicans included the SALT deduction cap in their 2017 tax law in order to raise revenue to pay for tax cuts elsewhere in the bill, and to put a limit on the federal tax code subsidizing higher state taxes. They have noted that most taxpayers, even in high-tax states, are gettin a tax cut under the 2017 law.

But the SALT deduction cap is unpopular among politicians in high-tax, Democratic-leaning states such as New York, New Jersey and California, who argue that it unfairly punishes their residents and makes it harder for states to provide robust public services. In California, one of a number of states holding their presidential primaries on March 3, Democrats won several GOP-held House districts in 2018 where taxpayers had previously relied on the SALT deduction.

The SALT deduction issue has been more prominent in Congress than it has been on the campaign trail, where Democratic presidential candidates have spoken more about their plans to raise taxes on the rich and corporations. Democrats face challenges in repealing the SALT deduction cap because analysts have estimated that high-income taxpayers would benefit the most from repeal. 

Democratic presidential candidates have not all taken the same position on the SALT deduction cap, and some candidates' positions are not clear.

Former Vice President Joe BidenJoe BidenBiden adds to vote margin over Trump after Milwaukee County recount Krebs says allegations of foreign interference in 2020 election 'farcical'  New DOJ rule could allow executions by electrocution, firing squad MORE has expressed support for repealing the SALT deduction cap, while former New York City Mayor Michael BloombergMichael BloombergBiden's great challenge: Build an economy for long-term prosperity and security The secret weapon in Biden's fight against climate change Sanders celebrates Biden-Harris victory: 'Thank God democracy won out' MORE supports keeping the SALT deduction cap, according to news reports.


Sen. Amy KlobucharAmy KlobucharHillicon Valley: YouTube suspends OANN amid lawmaker pressure | Dems probe Facebook, Twitter over Georgia runoff | FCC reaffirms ZTE's national security risk Democrats urge YouTube to remove election misinformation, step up efforts ahead of Georgia runoff YouTube temporarily suspends OANN account after spreading coronavirus misinformation MORE (D-Minn.) last year voted in the Senate to disapprove of regulations related to the SALT deduction cap, while Sens. Elizabeth WarrenElizabeth WarrenThomas Piketty says pandemic is opportunity to address income inequality The Memo: Biden faces tough road on pledge to heal nation Disney laying off 32,000 workers as coronavirus batters theme parks MORE (D-Mass.) and Bernie SandersBernie SandersIn defense of incrementalism: A call for radical realism Thomas Piketty says pandemic is opportunity to address income inequality Trump will soon be out of office — but polarization isn't going anywhere MORE (I-Vt.) were not present when the vote took place.

Buttigieg also said that he wants to expand the earned income tax credit and the child tax credit — two tax credits that benefit low- and middle-income households. His proposed enhancements to the child tax credit include making the current $2,000 credit fully refundable and creating an additional $1,000 refundable credit for families with children under the age of 6.

There is widespread support among Democrats in Congress and on the campaign trail to expand the earned income tax credit and child tax credit.

The proposals Buttigieg floated Monday come on top of other tax proposals the candidate has offered to increase taxes on the wealthy and corporations, including a financial transaction tax and raising the corporate tax rate from 21 percent to its pre-GOP tax law level of 35 percent. Buttigieg's campaign said Monday that the candidate would tax U.S. companies' foreign earnings on a country-by-country basis at a rate of 28 to 35 percent.