On Friday, The New York Times reported that former President Donald Trump's tax returns suggest he was on the hook for over $8 million extra in taxes — thanks to a provision from his own Tax Cuts and Jobs Act of 2017.
This comes after the House Ways and Means Committee released six years of the former president's taxes — the conclusion of a years-long legal battle in Congress and the courts to obtain and investigate these records.
"The tax law Mr. Trump signed in late 2017, which took effect the next year, contained some provisions that most likely gave him an advantage at tax time — including the scaling back of the alternative minimum tax on high earners," reported Jim Tankersley, Susanne Craig, and Russ Buettner. "But one provision in particular drastically reduced the income tax deductions Mr. Trump could claim in 2018 and beyond: limits that Republicans placed on deductions for state and local taxes paid."
"The so-called SALT deduction disproportionately hit higher earners, including Mr. Trump, in high-tax cities and states like New York. In 2019, he reported paying $8.4 million in state and local taxes. Because of the SALT limits included in his tax law, he was able to deduct only $10,000 of those taxes paid on his federal income tax return," said the report. "Those losses could have been mitigated at least in part by other sections of the law that were favorable to wealthier taxpayers like Mr. Trump."
Trump's tax cut bill was widely panned as a giveaway to corporations and the ultra-wealthy by Democrats; 65 percent of the cuts go to the top 20 percent of earners, and in 2027, that figure is forecast to rise to 83 percent flowing to the top 1 percent. One way Republicans tried to defray the cost of the bill was by sharply limiting SALT.
Critics of the SALT deduction claim that it was itself a huge tax cut to the wealthy, and that it may have removed incentives to build housing in wealthy areas with housing shortages. Proponents charge that limiting SALT predominantly punished Democratic states like New York, New Jersey, and California where housing is more expensive, and that it helped these states fund public and social services.
