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SALT in the Wound

By Sen. John Thune

December 10, 2021


I may be a little biased when I say this, but South Dakota is the best place in the country to live, work, and raise a family. We have great people who are hardworking and God-fearing. South Dakota boasts a strong economy with one of the lowest unemployment rates in the country. And we value personal freedom and fiscal responsibility. We want people to keep more of their hard-earned money and make their own decisions about how they use it. That’s why South Dakota is one of the few states in the country that doesn’t have a state income tax.

Unfortunately, Washington Democrats are trying to capitalize on states like South Dakota that practice fiscal responsibility by penalizing our taxpayers and rewarding those in other high-tax states. That’s right, Democrats want to use your tax dollars to subsidize millionaires who live in states like New York and California. It sounds crazy, but this proposal is a key pillar in the Democrats’ reckless tax-and-spending spree bill and the second most expensive item over the first five years of the bill’s lifetime, should it be enacted.

It’s called the “state and local tax deduction,” or SALT deduction. It’s a federal law that allows taxpayers in states that have a high state income tax to deduct a portion of that expense from their federal income tax. It forces federal taxpayers in all 50 states to offset the high taxes certain states have chosen to impose on their residents. It’s unfair, and it has the potential to reward fiscal irresponsibility.

The Republican-led Tax Cuts and Jobs Act capped the SALT deduction at $10,000 in order to protect the vast majority of affected middle-income taxpayers. Democrats, however, plan to lift the cap to $80,000 without an income limit, tilting the benefit disproportionately to high-income individuals who mainly live in Democrat-led, high-tax states. Under the Democrats’ proposal, approximately 70 percent of the tax benefit would go to the top 5 percent of households, and nearly one-third of the tax benefit would go to the top 1 percent of households. As for lower- and middle-income families, this benefit would do almost nothing. In other words, Democrats want folks in states like South Dakota to pay for a tax break that would be a windfall for some of the wealthiest individuals in our country who are living in high-tax states.

I believe that it is fundamentally wrong for the taxpayers of South Dakota to be subsidizing wealthy Americans because their states have decided to enact policies that require them to take more money from their citizens. I’m confident that South Dakota taxpayers don’t want their money being used to make the rich richer. It’s clear that Democrats in Washington could learn a thing or two from the way we do things in South Dakota – we aren’t interested in being told how to live our lives by out-of-touch Washington bureaucrats, and we definitely aren’t interested in bailing out costal elites in blue states.  

For months, I have been sounding the alarm on many of the egregious items in the Democrats’ reckless tax-and-spending spree. This is one of the worst, and I’m curious to hear how Democrats square their campaign slogan of wanting the “wealthy to pay their fair share” with their proposal to give the wealthy a massive tax break. The bottom line is that the Democrats’ bill is full of radical and irresponsible policies that will hurt middle-income families and increase the role of the federal government in their lives. Folks in South Dakota hired me to be a good steward of their tax dollars, which is why I will continue to speak out and work to stop these damaging and irresponsible proposals.