For Immediate Release: Thursday, October 26, 2017
Councilmember Hucker Delivers
Statement Against GOP Plan
to Gut Tax Deduction
ROCKVILLE, Md., October 26, 2017—Montgomery County Councilmember Tom Hucker participated in a national media conference call on October 25 to discuss the disastrous consequences of congressional Republicans’ proposal to eliminate the Federal income tax deduction for State and local taxes.
The call was organized by Americans Against Double Taxation, a coalition whose members include the National Governors Association, National Association of Counties, National League of Cities, U.S. Conference of Mayors, National Conference of State Legislatures, National Association of Realtors, National School Boards Association, National Education Association, American Federation of Teachers, American Federation of State, County and Municipal Employees, and Service Employees International Union. Other participants were Sen. Chris Van Hollen (D-Md.); Sen. Tammy Baldwin (D-Wisc.); Milwaukee Mayor Tom Barrett (D); and Mayor Steve Benjamin (D) of Columbia, S.C., vice president of the U.S. Conference of Mayors.
Councilmember Hucker’s full statement from the conference call is below:
Montgomery County borders Washington, D.C., and has more than one million residents. We are a very diverse, majority-minority County, with large African-American and Latino populations.
Over 30 percent of our population is foreign born, relocating here from more than 170 nations. Overall, we’re a pretty affluent County, but we also have a very high cost of living, and we still have pockets of low-income communities with high unemployment.
As a County Councilmember and a former State legislator, I can say unequivocally that eliminating the deduction for State and local taxes would be disastrous for Montgomery County. It would take a heavy toll on taxpayers in many cities and counties like ours around the nation.
Our County, with its one million residents, relies almost entirely on income and property taxes for the revenues it needs to fund its $5.4 billion annual operating budget.
In fact, according to the County’s Office of Management and Budget, 87.9 percent of our County’s revenues in fiscal year 2018 will come from property and income taxes (46.7 percent and 41.2 percent, respectively). And yet we still have significant unmet needs. Just last year, the Council took a difficult, unanimous vote to raise our property taxes significantly to reduce class size in our overcrowded local schools.
That heavy reliance on local property and income taxes, combined with the fact that many County residents itemize their tax returns, means that many take advantage of the SALT deduction: According to Americans Against Double Taxation, just more than 266,000 households in Montgomery County took the SALT deduction on their 2015 Federal income taxes. Eliminating the deduction would have raised their taxable income, on average, by $18,247.
And this deduction isn’t helping just our wealthier households. Far from it: More than three-quarters of these Montgomery County households that took the deduction were middle class, with adjusted gross incomes below $200,000.
All told, they deducted almost $5 billion from their taxable incomes, with about 40 percent of that total deducted by middle-class households.
That means the SALT deduction saved the average family that had a Federal tax rate of 25 percent more than $4,000 in 2015.
(A calculator that allows taxpayers to figure, by their ZIP code, how much eliminating the SALT deduction would cost them, is here:
http://news.americansagainstdoubletaxation.org/salt-tax-calculator/ )
That’s money that our families rely on to cover their mortgages and car payments, buy food and clothing, save for retirement, and put their kids through college.
And that $4,000 per household is money that goes back into our community. It contributes to the County’s economic vitality, spurring business growth and creating jobs.
Not only that — without that money, more families will be forced to turn to County, State and Federal social service programs for help, which in turn will mean higher taxes to fund those programs.
On top of that, the SALT deduction is a major factor in many people’s decision to buy a home. Eliminating the deduction will put a big damper on the housing industry, and that will ripple throughout the economy.
Removing the SALT deduction is also unfair. For the Federal government to tax state and local tax payments is double taxation; that’s why State and local taxes were exempted from Federal taxes when the Federal income tax was adopted more than a century ago. We get enough unfunded mandates from the Federal government — we don’t need double taxation on top of those.
The Republican majority in Congress has done nothing about stagnant wage growth and has broken its promises to address our pressing infrastructure needs to improve schools, transit, bridges and water utilities.
Our families and local governments are having a hard enough time these days without the Republicans in Congress doing more damage by getting rid of the SALT deduction.
It’s just the latest example of the Republicans making a mockery of their pledge to help the middle class through tax reform.
That’s why getting rid of the SALT deduction is so wrong for so many reasons.
For more information or inquiries, contact the Office of Councilmember Tom Hucker, at 240-777-7960 .
[1] The Government Finance Officers Association (2017, January 1). The Impact of Eliminating the State and Local Tax Deduction. Retrieved October 25, 2017, from https://view.publitas.com/p222-14698/gfoa-salt-study-with-2015-data/page/1
[2] National Association of Counties. State and Local Tax Deduction Factsheet. Retrieved from http://www.nysac.org/files/SALTFactSheet.pdf
[3] National Association of Counties. Analysis of Internal Revenue Service 2015 data.
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Release ID: 17-330