Blue-state tax break becomes a flashpoint in coronavirus-relief bill – By The Wall Street Journal Staff (FOX Business) / Aug 5 2020
Democrats say $10,000 limit on state and local deductions hurts states’ ability to fund services; Republicans mock effort to repeal the cap
WASHINGTON — Rep. Tom Suozzi (D., N.Y.) knows his bid to repeal the $10,000 cap on state and local tax deductions is a long shot for inclusion in any final coronavirus-relief bill. He has seen the mockery from Republicans, who criticize Democrats for proposing a tax cut for the rich.
But for Mr. Suozzi, restoring the tax break is urgent, central to New York’s ability to keep high-income residents from fleeing and to finance a progressive state government that can respond effectively to the pandemic.
“We’re losing taxpayers when we need them most,” he said. “The people who can’t afford to move or just don’t want to move are the ones left behind holding the bag.”
The $137 billion proposal would temporarily eliminate the $10,000 cap on the state and local tax deduction for 2020 and 2021. House Democrats included it in the virus-relief bill they passed in May, and it represents about 4% of the total price tag. That is separate from nearly $1 trillion proposed in direct aid to state and local governments.
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