GOP Tax Plan Pours SALT in the Deficit Wound

As the Senate debates the “One, Big, Beautiful Bill,” Americans should brace for a larger federal budget deficit and national debt. We’re talking trillions of dollars.

One notable aspect of the House bill that suggests a major shift from the Tax Cut and Jobs Act is increasing the state and local tax (SALT) deduction cap from $10,000 to $40,000. Two Republican congressmen from New York – Mike Lawler and Tom Suozzi – both argued in Congress and in the mainstream media that the current deduction was unfair to the citizens of high-tax states like New York.

However, increasing the SALT deduction cap subsidizes high-tax states and reduces the incentive for lawmakers in states to have to live with the consequences of their policy decisions. In a federalist society like America, U.S. states are laboratories of democracy. Individuals vote for policymakers who align with their own personal preferences, and relatively low barriers to migration within the U.S. allow people to move to areas that align with such preferences. The SALT deduction cap muddies these laboratories.

Continue reading at Real Clear Politics.