Congressman Tom Suozzi (D., N.Y.) took to Twitter yesterday to do what Democrats representing New York and California do best: Whine about the 2017 tax bill’s capping of the State and Local Tax (SALT) deduction at $10,000. In a since-deleted thread, here’s what Suozzi had to say:
In New York, a married teacher and grocery store worker easily make $150,000 a year. But that doesn’t make them wealthy, that makes them middle class in New York. While $150,000 is considered wealthy in South Carolina, or Oklahoma, or Iowa, or South Dakota, in NY and many other areas in the country, the cost of housing, utilities, food, health insurance and basic essential living costs makes them just getting by. We need to understand the diversity of our nation. We need the SALT deduction.
Where to begin?
Let’s start with the hilarity of his comparison between the New York and other states: “I know that in your third-world states, $150,000 would make you the richest household in your county, but here in New York it’s a pittance.” While it’s absolutely true that incomes in New York tend to be higher, Suozzi grossly exaggerates the plight of upper-middle-class New Yorkers. $150,000 a year in household income would place you in the 78th percentile of the state. In South Carolina and Iowa, it would place you in the 86th and 87th percentile, respectively. That’s not exactly the gaping difference Suozzi suggests it is.
Second, desperate not to appear to be advocating the upper-class tax cut that he is, Suozzi tries to cloak said advocacy in the language of the Left. This hypothetical household may be making more money than 78 percent of their neighbors, but cut them a break. It’s a teacher and a grocery store worker for goodness sake, why on earth would you want to punish these people? He also dubiously characterizes the SALT deduction as an instrument of diversity and inclusion. Okay.
Most important, though, Suozzi’s argument exhibits a flawed understanding of the SALT deduction itself. He submits that the SALT deduction is needed to account for the difference in the cost of living between states. There are a couple of problems with this formulation. First, cost-of-living differences are largely offset by differences in income. In South Carolina, Iowa, or any of the other states Suozzi mentions, no teacher-grocery-store-worker household is going to be making $150,000 a year; Suozzi himself acknowledges this! Employers account for cost of living in their offerings. Second, the SALT deduction is not designed to help taxpayers afford “the cost of housing, utilities, food, health insurance and basic essential living costs.” It allows taxpayers to deduct the money they’re paying in state and local taxes, not that they’re spending on groceries, utilities, and rent. You could be living in an area with an extremely high cost of living, but if your state and local taxes were low, the SALT deduction would be of no help at all.
So why is Suozzi so determined to uncap the SALT deduction? The answer is purely political. In overtaxed, predominantly blue states, Democrats in the state and local government raise taxes to provide the social services they want. Suozzi himself did this as Nassau County executive, raising property taxes by well over 20 percent. While social services are popular, higher taxes are not, and discontent with increases such as the ones Suozzi supported represent an electoral liability to his party. The solution to this problem is the SALT deduction, which allows state and local officials to raise taxes with less blowback since their upper-class constituents can just write them off on their federal bill. It’s manifestly unfair to South Carolinians and Iowans who are then forced to pay more in federal taxes than their counterparts in New York only because they chose to forgo certain social services available to New Yorkers.
If high-income New Yorkers are unhappy with the amount that they’re forking over in taxes, there’s a simple remedy: Don’t elect people like Tom Suozzi. Allowing for an unlimited SALT deduction is not only regressive, but selectively so.