Eliminating State and Local Tax Deduction to Pay for Tax Cuts for Wealthy Is a Bad Tradeoff for West Virginians

For Immediate Release  Contact: Caitlin Cook, 304.543.4879

President Trump and congressional Republicans leaders' tax plan would eliminate the federal deduction for state and local taxes (SALT) and use the revenue to pay for tax cuts for the wealthy and big corporations. This would be a bad tradeoff for low- and middle- income West Virginians, according to a new report by the Center on Budget and Policy Priorities.

First, the GOP tax plan is more tilted to the wealthy than the SALT deduction alone. In fact, even including elimination of the SALT deduction, 80 percent of the GOP plan's net tax cuts would go to the top 1 percent of filers in 2027. In 2018, the wealthiest 1 percent of households in West Virginia would receive 80 percent of the benefits of these tax cuts, while the bottom 60 percent would only see 9 percent of the benefits. In West Virginia, approximately 17 percent of tax filers use the SALT deduction, with the average taxpayer deducting over $9,000 from their federal income taxes, according to a recent report by the Government Finance Officers Association.
Second, the SALT deduction helps state and local governments fund public services with widely shared benefits, tax cuts for the wealthy do not. That's because higher-income taxpayers are more willing to support state and local taxes because of the deduction. Repealing it would make it harder for West Virginia - which is already facing serious budget strains - to raise adequate revenues over time for key services like education and transportation. It could also cause states to rely more on taxes and fees that fall harder on lower- and middle-income families.
"Our schools, roads, public transit, and other building blocks that help West Virginia thrive would likely suffer in coming years if the SALT deduction is eliminated or even partially repealed" said Ted Boettner, West Virginia Center on Budget and Policy Executive Director. "Instead of pursuing a massive tax cut that benefits wealthy taxpayers who least need help and would likely put a strain on West Virginia's budget, Congress should pursue a plan that lays a foundation for long-term economic growth and boosts the wages of working families."
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© 2018 West Virginia Center on Budget and Policy