Giving themselves a raise

EXCERPT FROM THIS ARTICLE:

While Democratic leaders work out how to pay for a $1.75 trillion reconciliation bill that could include enhanced child tax credits, universal preschool, and subsidized childcare, they’re also kicking around the idea of throwing in a major tax cut — one whose benefits would overwhelmingly accrue to the highest income earners.

In fact, some of the biggest beneficiaries could be the very politicians who are pushing to get it passed.

Included in the bill is a provision to raise the current $10,000 limit on state and local tax deductions, known as the SALT cap, to as high as $80,000. Established in the 2017 Tax Cuts and Jobs Act, the cap restricts how much high earners can write off on their federal tax returns. If it’s raised, the rare earners who pay property, state, and local income taxes in excess of $80,000 could write off an additional $70,000 on their federal returns.

At the top federal income tax rate of 37%, these filers would add nearly $26,000 to their net income every year. Those with middle incomes could get a tax cut, too — about $20 a year, on average.

Maxine Waters
Estimated property value: $4 million
Estimated property taxes: $32,000
Estimated write-off: $22,000
Waters, who chairs the U.S. House Financial Services Committee, lives in a 6,000-square-foot Los Angeles mansion that is no longer located in her district . With an $80,000 SALT cap, Waters could write off an additional $22,000 in property taxes.

Joe Biden
Estimated property value: $3.8 million
Estimated property taxes: $21,000
Estimated write-off: $11,000
The president owns two Delaware homes, one in Wilmington and one in Rehoboth Beach, with a combined value of just under $4 million. Thanks to the state’s low property taxes, it is estimated that he owed a relatively paltry $21,000 to the local authorities for them in 2021. Still, raising the SALT cap could grant Biden a cool $11,000 federal tax write-off from his two houses.

Nancy Pelosi

Estimated property value (main home only): $9.4 million
Estimated property taxes: $92,964
Estimated write-off: $70,000
One of the richest members of Congress, Pelosi reportedly owns nine properties worth more than $20 million in total. However, her main home in San Francisco’s tony Pacific Heights neighborhood is worth an estimated $9.4 million alone, and Zillow says she owed $92,964 in 2020 property taxes for just that one house. This alone would see Pelosi reach an $80,000 SALT cap, allowing an additional $70,000 federal tax write-off.

Bernie Sanders
Estimated property value: $1 million
Estimated property taxes: $21,557
Estimated write-off: $11,557
The Vermont socialist owns two houses in his home state, including one on the shores of Lake Champlain. He had owned a D.C. condo since 2007 before selling it off this year. Sanders, who has argued against a full SALT cap repeal , could write off an additional $11,557 in property taxes with a raised cap, on top of any deductions from state and local income taxes.

Kamala Harris
Estimated property value: $5 million
Estimated property taxes: $37,764
Estimated write-off: $27,764
Like Sanders, Vice President Harris has been selling property of late, unloading condominiums in Washington and San Francisco after moving in at Observatory Circle. But she still owns a home in Los Angeles. Her husband, Doug Emhoff, purchased the $5 million, 3,500-square-foot abode before the couple were married. It’s located in LA’s upper-crust Brentwood neighborhood, meaning the couple counts A-listers such as Reese Witherspoon and LeBron James as neighbors. Zillow put taxes on the house at $37,764 in 2020, so Harris could have a $27,764 tax write-off on the line in the SALT cap fight.

Middle-income earners could see a small break, too, if they decide it’s worth itemizing. CRFB’s analysis found that just 2.5% of the tax savings for a higher SALT cap would go to taxpayers making less than $100,000 a year.

“Even those making $200,000 a year wouldn’t get much of a benefit,” said Goldwein. “As your income goes up, the benefit goes up.”