Asking sincerely why the Democratic Party is “pushing a tax cut for the wealthy,” the New York Times’s editorial board yesterday came out in favor of abolishing the SALT deduction completely:
The SALT deduction cap is unfair. The deduction is often described as a federal subsidy for state and local governments because the federal government effectively is paying for a portion of each dollar in state and local taxes. Capping the deduction has the effect of providing a smaller subsidy, per dollar, to jurisdictions that collect more money in taxes.
New Yorkers, who pay higher taxes than most Americans, get more extensive and higher quality public services. Residents of other states choose lower taxes and less government. Federal tax policy should provide consistent support for either choice.
This board historically has opposed the elimination of the federal subsidy. But the rise of economic inequality has increased our focus on the distribution of taxation and led us to a different conclusion: Instead of eliminating the SALT deduction cap, Congress should eliminate the deduction.
Naturally, the board also wants to increase both taxation and spending at the federal level, whereas I would like to lower both. If, as the Times suggests, we should want federal tax policy to facilitate meaningful political choices, then limiting the size of the federal government is much to be desired. There is a big difference between living in Florida and living in California, but that difference is not remotely as big as it would be if the top federal tax rate were 5 percent and spending were set at a fraction of its current rate. Then, we could really see what rules people set when given a harsh choice.
Still, the Times should be applauded for taking the first step, which is to insist that, irrespective of the federal government’s size, taxpayers should pay the same rates for its upkeep. It makes no sense whatsoever that, as a Floridian, I pay more for the army than does a New Yorker with the same income. On that much, apparently, we can increasingly agree.