By: Mark Glennon
Hypocrisy is everywhere in politics, but three of Illinois’ self-styled progressives are going for broke.
Illinois Senators Dick Durbin and Tammy Duckworth, as well as Illinois Rep. Brad Schneider, are leading the charge to repeal the cap on state and local tax deductions, as reported by Crain’s and elswehere. They’ve each sponsored bills to eliminate the SALT cap, as it is called, which became law in 2017.
That cap of $10,000 on deductibility of state and local taxes, including property taxes, walloped many high income taxpayers not just by increasing their federal tax bill but by reducing the value of homes they own. We described the research showing that in our recent article here.
There’s actually no debate about it: Liberal and conservative tax experts alike agree that the eliminating the SALT cap would be a windfall for high earners. The conservative Tax Foundation explained why here, and the liberal Institute on Taxation and Economic Policy, ITEP, wrote this in an article opposing elimination of the cap:
ITEP estimated that this would cost more than $90 billion in a single year. We found that 62 percent of the benefits would go to the richest 1 percent and 86 percent would go to the richest 5 percent. There is no state where this is a primarily middle-class issue. In every state and the District of Columbia, more than half of the benefits would go to the richest 5 percent of taxpayers. In all but six states, more than half of the benefits would go to the richest 1 percent.
The windfall from eliminating the cap would primarily benefit the rich in progressive, high tax states like Illinois, New York and New Jersey, so, predictably, other lawmakers pushing for it are primarily from those states.
One argument made by supposed progressives from those states who want to eliminate the cap is particularly two-faced. Their states, they say, send more to the federal government than they get back, so it’s only fair to eliminate the SALT cap to even things out. Illinois is often said to be among the states that send in more than comes back.
But that’s essentially like saying they don’t believe the federal income tax should be progressive. The reason certain states send more to the federal government than they get back is almost entirely due to higher federal tax rates for big earners, and states with an imbalance like Illinois, New York and New Jersey have more of those big earners. We explained the details and the relevant studies here. By citing the imbalance between contributions and receipts from the federal government, the supposed progressives are simply trying to claw back higher taxes paid by the rich.
The bottom line is simple: Lawmakers who claim to be progressive while pushing to eliminate the SALT cap are really just shilling for a major tax cut for the rich in their own states.
*Mark Glennon is founder of Wirepoints.
Audio and summary 
If this bill passes, say goodbye to local control over all Illinois parks and expect to see open drug and alcohol use, needles, no sanitation and fire hazards, but no ordinary park users.
Would have been interesting if jbs fair tax was approved, (supposedly taxing the rich) and then if SALT caps are reinstated by Congress it gives rich in Illinois a big tax cut?
Tax anything and you get less of it. Revenue projections based on tax increases never are accurate. The Governor’s “fair tax” came close because 91% of the voting sheep in Cook County favored it. Fortunately, the rest of the state opposed it!
I know it’s trite, but it’s true: if liberals didn’t have double standards, they’d have no standards at all.
Yep, Durbin, Duckworth and Schneider are always focused on helping to top 1%. Money from that group and the unions is what funds their campaigns. As for the middle class, or lower middle class, please show me how these fools have helped them at all. Are they doing better in Chicago, particularly after all Durbin’s years as our Senator? Nope – more dependent on the government than ever.
According to the Rockefeller Institute, Illinois is now a net taker.
https://rockinst.org/issue-areas/fiscal-analysis/balance-of-payments-portal/
That’s huge, nixit. That report is new since I wrote the referenced article, and Rockefeller Inst is the leading group tracking that info. You’re the man, nixit. We will write about it.
If you can explain how the SALT cap turned Illinois from givers to takers, you’re a better man than me.
I often hear the same type of argument as it relates to State spending downstate vs Chicago. Spending on roads and bridges seems to have a big factor while school funding seems to be lacking. Perhaps I have read the wrong articles. Keeping that in mind I did not see a category for things such as the military. Scott AFB comes to mind as I write this making me wonder what is included as spending and what possibly is not. Today’s studies are, to me, so often crafted to create a point that is desired to the presenter…just saying.
You don’t have to go as far as downstate. How about the predominately African American south suburbs? They receive far more state funding then they pay in state income taxes. Should we label them “takers” as well? The same folks who are quick to label downstate or southern states as “takers” skip right over the dozens of takers in Cook County. From a national perspective, you’ve got all those rich folks in the Northeast retiring to the South. Plus, as you stated, military installations are predominately in remote locations and/or warmer climates. Would NY be happier if we plowed over… Read more »
Social security payments are considered ‘takers’ too for purposes of federal spending and many southern states have high numbers of retirees who’ve maxxed out their social security payment.
Do those numbers include SSI for illegals? How about medicaid?
Mike Bloomberg will get a $60M federal tax cut. Bloomberg gave the Biden campaign $60M.
It is the middle class that is going to be taxed out of existence. That was always the plan.
The 1 percenters stay exactly where they have always been.
Anyone that doesn’t know that is a first class chump–or should I say chumbalone?
The Biden administration needs to raise massive tax revenue on rich at federal level to pay for the woke agenda stuff, but is then going to give all the federal SALT revenue to the states, mostly big blue states?
Realize what i was saying is incorrect. Reinstating SALT caps just gives the feds less and an excuse for a broke Illinois to raise taxes higher, which im sure it will do in a heart beat. Still, if SALT caps are reinstated, where’s the fed going to get all the fat cat tax revenue for all the woke agenda stuff?