Black Hispanic households would profit much less from the lifting of the SALT cap

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Legislators in several states with high taxes and high cost of living are pushing for the cap set in former President Trump’s 2017 tax plan to be lifted, stating that it has increased taxes for some middle-class families.

However, lifting the SALT cap would exacerbate existing racial inequalities, the institute’s analysis suggests, a loophole President Joe Biden has promised to fill.

“There has been a long history in fiscal policy analysis of neglecting different effects on race and ethnicity,” said Carl Davis, ITEP director of research, who co-authored the study.

In some states the disparity is more pronounced

In addition, a lifting of the SALT cap would negatively affect the minorities in precisely those states that would benefit most from the lifting of the limit, according to the study.

Put another way, Black, Hispanic, and some Asian families in New Jersey, California, Illinois, and New York would see an even smaller share of the benefits of lifting the SALT cap than national numbers.

In all four states, black families are 44% to 54% less likely than white families to receive a tax break, and Hispanic families are up to 49% less likely to benefit from the SALT cap being lifted 60% less than in white families.

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For example, in New Jersey, 57% of families in the state are white, but 73% of the benefits of lifting the SALT cap would go to white families, the study found.

Hispanic families in New Jersey, who make up 20% of the state’s families, would only get 9% of the benefits, and the 13% of black families in New Jersey would see about 6% of the tax cuts. Asian families, 9% of the state, would see about 11% of the benefits of lifting the SALT cap.

Roadblocks for lifting the SALT cap

Of course, most American families of all races would get little or no benefit from lifting the SALT cap.

More than two-thirds of the tax cuts in a possible 2020 SALT cap lift would go to those earning more than $ 200,000 a year, which is less than 7% of U.S. families, according to the institute.

Other studies have found similar results.

According to the Tax Policy Center, only 9% of American households could benefit from a lifting of the SALT cap. The same analysis found that 96% of the benefits of SALT waiver would go to the top 20% of the workforce, with 57% of the benefits going to those whose incomes are below the top 1%.

However, the abolition of SALT is a problem in some states. A non-partisan caucus to lift the SALT cap has said it will not vote for laws that do not include ending the $ 10,000 limit, which would potentially pass President Joe Biden’s $ 2.25 trillion infrastructure plan makes it more exciting.

However, the White House has been reluctant to agree to the SALT cap being lifted because of the cost. In its first year, the measure raised $ 77.4 billion, and lifting the cap would cost about $ 88.7 billion in 2021 alone, according to the impartial Joint Tax Committee. On Tuesday, Rep. Josh Gottheimer, DN.J., proposed paying for the SALT cap cut through increased IRS audits.

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