Former Reagan economic adviser Art Laffer said state and local tax deductions (SALT) have been capped but shouldn’t have existed in the first place.
“You get a subsidy from the federal government for your state and local taxes, which subsidized the high-tax states," Laffer said to FOX Business’ Stuart Varney on Monday. "And that shouldn’t happen.”
Democrats are vowing to fight to bring back SALT deductions without caps, which President Trump’s 2017 tax law put a lid on, when they take control of the House next year.
The SALT deductions allow taxpayers to deduct the property and income taxes they pay to states and cities from their federal returns. They are especially popular in high-income, high-taxes states like California, New Jersey and New York. Some members of Congress in these states have opposed the cap, which only allows people to deduct up to $10,000 from state individual income or sales taxes and property taxes.
But Laffer said the deduction, which has been part of the federal tax code since 1913, should be eliminated.
“It shouldn’t be dubbed Democrat, Republican, liberal or conservative – those deductions are inappropriate and shouldn’t be there,” he said.
Democrats are set to take control of the House at noon on Jan. 3, but Republicans still maintain the majority in the Senate.