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Cap on SALT deductions is unfair, officials tell House subcommittee

Bayville Mayor Robert De Natale speaks Tuesday at

Bayville Mayor Robert De Natale speaks Tuesday at a House hearing on state and local tax deduction caps. Photo Credit: Bloomberg/Andrew Harrer

Local officials representing different corners of the country and various political views sought Tuesday in Washington to make a common case: The cap on state and local tax deductions is unfair.

In testimony before a House panel, they painted a picture of school funding being strained, firefighting resources approaching a breaking point and homeownership growing out of reach.

“It’s not a question of Republican or Democrat, it’s a question of fairness,” Bayville Mayor Robert De Natale said.

“I’m a registered Republican. I actually voted for President Trump," he said. "This SALT cap limit is totally unfair to villages like mine and others throughout the country.”

The mayor, part of a slate of witnesses that also included a school district superintendent from Ohio and a firefighters' union president from Wisconsin, spoke before the House Ways and Means Committee’s Subcommittee on Select Revenue Measures, which was weighing the impact of the cap.

They reiterated that the SALT deduction cap amounts to double taxation of residents and rejected the argument that it impacts only the wealthy.

Bayville has seen more homes go on the market as residents “rethink staying in the village where they grew up or raised their children,” De Natale said.

The village's approximately 7,000 residents are mostly middle class, and the majority of homeowners require two incomes to afford to live there, he said.

Federal elected officials representing high-taxed states such as New York and California have argued that their constituents shoulder a greater burden under the cap, passed as part of the GOP’s sweeping tax overhaul in 2017.

The Republicans and Democrats of Long Island’s House delegation have argued the cap disproportionately hurts their districts. They seek a full repeal of the limit. There are three bills in Congress to lift the cap and a fourth offering a graduated rate.

Defenders of the limit, including members of President Donald Trump’s administration, have countered that poorer parts of the country shouldn’t have to subsidize the regions that are better off.

Rep. Tom Rice (R-S.C.) on Tuesday cited the rural parts of his district in asking De Natale: “How do I explain … to somebody whose income is one-fourth of what it is in your district — one-fourth — how do I explain to them that they should subsidize part of the cost of living in Long Island?”

Rice and other subcommittee Republicans cited newly released figures by the nonpartisan Joint Committee on Taxation which found that half of the benefit of a full repeal of the cap would go to those earning $1 million or more.

Democratic members argued that the GOP policy puts corporate interests over everyday Americans, noting that the tax rate cut for corporations is permanent while that for individuals carries an expiration date.

Rep. Thomas Suozzi (D-Glen Cove) disputed the notion repealing the cap would shift the tax burden to poorer Americans.

He proposed paying for the repeal by returning the federal tax bracket for the country’s highest earners to 39.6 percent from 37 percent and raising the corporate tax rate to 25 percent from 21 percent.

New York is the “biggest net donor to the federal government” of any state in the country, Suozzi noted, saying property taxes in the state could be lowered if more federal money was being returned.

“I want to make America fair again,” Suozzi said. “I want to see some fairness here.”

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