Kamala Harris has already stolen one idea from Donald Trump. Now she should steal another, Helping middle class families in California and other high tax states.
Forget the pride of being a writer. If an idea is good politics — maybe even good policy — go for it. It’s election season. Keep an open mind and recognize that even a campaign opponent — even the loathsome Trump — can sometimes be working on something worthwhile.
Harris should copy Trump promises to restore federal tax exemptions for state and local taxes — called SALT in government parlance — if for no other reason than because it would dramatically help millions of fellow Californians.
The Vice President has already set a precedent Steal the campaign.
Last month, Harris skillfully embraced Trump’s proposal to exempt service worker tips from federal income taxes. She also won the support of the powerful Culinary Employees Union in Las Vegas, which is filled with restaurant and hotel workers.
Nevada is one of seven states that are set to face a close contest and will decide who wins the presidency on November 5.
Never mind that the idea of making tips tax-free has flaws. Many tipped workers earn so little that they don’t have to pay any federal income tax. So they won’t get any benefit.
Anyway, tips are income. Why should one income source be tax-free while another is not?
But discounting tips probably matches reality. I suspect not all of those tips are being reported as income anyway. They’re part of the underground economy. And is the IRS bothering to catch these “cheaters”? Doubtful. It really should focus on uncovering massive tax fraud.
The SALT idea also has critics.
First the background.
Trump and congressional Republicans eliminated the tax break in 2017. Trump now believes restoring it is politically beneficial as he attempts to appeal to middle-class voters.
“I will change it, bring back SALT, lower your taxes and so much more,” Trump wrote on his social media platform Truth Social last week. He later reiterated his pledge at a campaign event in New York.
“Trump is making absolutely empty promises,” said Rep. Katie Porter (D-Irvine), a leading advocate of reviving the SALT deduction. “He’s made this mess with SALT.”
Trump needed money from the middle class to pay for his corporate tax cut in 2017. So he and GOP members of Congress put a $10,000 cap on the deduction for state and local taxes.
Previously, we could deduct all of our state income and local property taxes on federal returns. The average SALT deduction in California exceeded $18,400. The state Franchise Tax Board reported that in the first year of the cap, Californians who itemized deductions incurred a total additional tax burden of $12 billion.
High-tax blue states led by Democrats were particularly criticized by the GOP legislation. It was not a big deal in many red states like Texas and Florida, where taxes are low or there is no income tax.
Then-Governor Jerry Brown of California accused Republican congressional leaders of “using their power like a bunch of Mafia thugs.”
More recently, Republican Rep. Mike Garcia of Santa Clarita asserted that the SALT cap is “a legislative middle finger to the middle-class families in our community. It’s punishing blue states, including the one I live in.”
In 2021, Governor Gavin Newsom and six other Democratic governors sent a letter to President Biden urging him to “lift the limit.” But nothing came of it.
The governors argued that “setting SALT limits was based on politics, not logic or good government.” “This attack disproportionately targeted Democratic-run states.”
Critics argue that eliminating the SALT limit — or raising it to, say, $80,000 — would primarily benefit the wealthy. Wrong.
This will help all taxpayers who itemize deductions when filing federal income taxes, especially homeowners who pay property taxes. In California, it’s a few million.
People considered rich in some states are middle class in high-cost areas of California, where housing is often expensive to purchase. High property tax deductions can be a big help.
True, those with greater means will save the most tax dollars. But this is relative. For the middle class, the savings may be more meaningful.
I suspect many critics of the SALT deduction are renters who have little to itemize and take the standard deduction. One positive feature of the Trump tax act was that the standard deduction was nearly doubled. So that tax plan should not be scrapped entirely.
Another complaint about the SALT deduction is that it subsidizes taxes in high-tax states like California, New York, and New Jersey.
“The states that receive more from the federal government than they pay in taxes are mostly red states. The states that receive less from the federal government but pay more in taxes are mostly blue states,” says Rep. Ted Lieu (D-Torrance), who has tried to reinstate the SALT deduction and gotten nowhere.
“Blue states subsidize red states. We should be trying to lower costs for all middle-class families.”
Porter has worked hard to restore tax exemptions. He introduced a bill that would eliminate the tax exemption cap for all taxpayers earning less than $400,000 annually.
“It never came to light,” she says.
“There was no commitment from either Democratic or Republican leadership,” she says. “That’s just the fact. Because if they wanted to (change the boundaries) they would have put the bill up for a vote (in the House).”
And this is true too.
Porter will leave Congress after this year. She ran for Senate and finished third in the primary, but did not qualify for the November ballot.
The Trump Tax Act — which includes the SALT cap — expires after next year unless Congress renews it. There will be a fight over which parts to save and which parts to junk.
Harris should join Trump in promising to break these limits. That would be good politics and even better policy.
