Here’s SALT in your eye

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Donald Trump is not yet president again, but the news has been full of what he’s a-fixin’ to do. That would be so with any incoming leader, but it’s especially true of such an innervated one.

Among the less titillating bits among Trump’s expansive plans is the desire (his and others’) to extend the Tax Cuts and Jobs Act that was implemented in 2017, during his first term.

The thing I personally hated about that tax cut is that, for me, it wasn’t one. It was an increase. Not by a lot — less than percentage point on my effective rate after the tax preparers did their usual stuff — but more is more.

The reason? SALT. The State and Local Tax deduction. Before the 2017 legislation, taxpayers who itemized their filing could deduct nonfederal taxes they paid — which for most people meant state income taxes and local property taxes, though it could also be sales taxes for those in certain states where that was more beneficial and who wanted to go through a lot of trouble documenting their lives.

After 2017, the SALT deduction was capped at $10,000 (with variables). That just happened to land in the government’s sweet spot for tapping me — I had been deducting about $13,000. That change somehow offset the tax rate reduction and a bit more. (The jobs part of the act’s title, on the other hand, didn’t change anything for me — I was employed before and after.)

That’s always the crux of any political or governance decision, isn’t it — how it affects us personally? If we were all our best selves, we’d put our greatest emphasis on the big picture, but direct impact is hard to ignore.

I didn’t really object to the cap on the deduction. I just minded being told I was getting a tax cut when I wasn’t.

The cap expires this year and has become a bargaining chip in the broader discussion over extending the 2017 legislation, other aspects of which also are scheduled to sunset in 2025. Some in Congress — including Republicans — want to raise the cap, and Trump is game.

Obviously the idea that the government should take in less revenue on purpose — when it already fails to balance its budget — has flaws. But that complaint bumps up against the notion that lower taxes produce more investment in the economy, which in turn should eventually produce more tax revenue, whereas forcibly higher tax collections are enervating. So that’s a classic American impasse.

Whether there should be a SALT deduction at all is subset of all that. The case for having it is that otherwise the government would be taxing the same money twice, a state of affairs that usually causes Republican antennae to lift. A case against it is that it primarily benefits high-income residents of high-tax states, while encouraging tax profligacy among those governors and legislatures.

Prioritize as you’d like, but it seems to me that arguments both for and against SALT are reasonable — and offsetting. But collectively we could use more revenue, and people who favor having the revenue to support strong public services generally also favor getting the money from the people or entities with more of it.

But that’s the other thing about the SALT debate that peeves me. It’s easy us-vs.-them fodder, “them” being the wealthy. Yet I was affected by the SALT cap, and I’m one of “us” — aren’t I?

One article I read about this issue, typical of the genre, focused on the advantages for those big earners. It mentioned that more than half of the benefits of doubling the cap to $20,000, as has been proposed, would go to those in the 95th to 99th percentiles for income. That’s around $250,000 or more a year. The article also asked readers to consider a “typical” married couple in a northeastern state with an income of $400,000. Even with cost-of-living differences, that makes my income quaint.

The article did mention a separate estimate that less than 1% of filers with incomes below $100,000 would receive a tax cut based on a higher cap. I guess I’d rather help lower the deficit.

Other news coverage focuses on the deduction’s benefits to high-tax states, of which Minnesota presumably is one. You can debate whether our state gets its money’s worth out of taxpayer investments. I think we do in principle — with an underlying value of fairness, though that’s in the eye of the beholder — while needing better accountability for the effort.

How the SALT deduction ultimately affects fairness requires second- or third-order thinking. What an untamed debt eventually will do to fairness is of a higher order still. Perhaps even an order of magnitude.