Letter to the Hon. Nancy Pelosi, Speaker of the House - Representative Malinowski Leads Letter Urging Vote to Restore SALT Deduction
Dear Speaker Pelosi:
We write to express our concerns regarding the 2017 Republican tax law's $10,000 cap on the State and Local Tax Deduction (SALT) and urge you to bring H.R. 5377, the Restoring Tax Fairness for States and Localities Act, to the House floor for a vote before the end of this year.
The SALT cap is terrible tax policy: it upends a long tradition of fiscal federalism; it erodes incentives for home ownership and charitable contributions; it seeks to punish and defund state and local governments that pursue progressive policies, and it imposes a significant marriage penalty. Furthermore, the impact of this tax hike has not been random. It was deliberately aimed at districts like ours, where voters have chosen to fund with their taxes better schools, health care, transit, parks, and social services.
Many of us earned the trust of voters last year because we promised to do everything in our power to restore the SALT deduction. The Democratic House majority would be far smaller and possibly non-existent if not for the promise we made. It is time to keep that promise. H.R. 5377 offers a balanced, fiscally responsible way to do so.
The bill would eliminate the marriage penalty this year and eliminate the SALT deduction cap altogether in 2020 and 2021, paid for by restoring the top marginal income tax rate from 37 to 39.6 percent. This rate increase would only affect taxpayers with incomes approaching a half million dollars per year and above. Finally, the bill would underscore the important contributions of critical state and local government employees: teachers and first responders. It would double the existing above-the-line deduction for teachers' out-of-pocket classroom expenses, from $250 to $500. It would also establish a $500 above-the-line deduction for the unreimbursed out-of-pocket work expenses of professional first responders. The bill is fully paid for.
It has long been accepted in America that we do not tax the same income twice -- national taxation must not crowd out the taxes needed to support critical state and local functions. That principle was first stated in the Federalist Papers. As long as there has been a federal income tax, Congress has enabled Americans to deduct the contributions we make to state and local governments from income subject to federal taxation. The Tax Cuts and Jobs Act thus scrapped more than a century of precedent, without so much as a hearing to consider the effects.
The impact on our districts has been devastating, particularly on seniors who own homes and live on fixed income. The combination of capping SALT at $10,000 and the elevation of the standard deduction also removes most of the federal tax incentives for homeownership and for making charitable contributions. Homeownership is one of the most important ways for middle-class American families to build wealth, and millions of our constituent families will lose ground as a result. We are likewise hearing grave concerns from our districts' charitable organizations that depend on local, small-dollar donations. Churches, food pantries, youth organizations, animal welfare organizations, and many other worthy groups are experiencing sharp drops in donations.
Our constituents are rightly demanding change, and we intend to deliver it. We urge a vote on this important legislation.