Montgomery County Council member Tom Hucker joined Sen. Chris Van Hollen and other Democratic elected officials from across the country on a conference call Wednesday to describe the potential effects of a Republican tax-cut proposal to eliminate the State and Local Tax Deduction.
Congressional Republicans are currently drafting a tax-cut package that could include eliminating the deduction that Hucker said is used by about 266,000 households in Montgomery County.
“I can say unequivocally that eliminating the deduction for state and local taxes would be disastrous for Montgomery County,” Hucker said on the call. “It would take a heavy toll on taxpayers in many cities and counties like ours around the nation.”
The deduction allows taxpayers who itemize their taxes to deduct state and local property taxes, income taxes and sales taxes on their federal tax bill.
Conservatives have criticized the deduction by arguing that it benefits wealthier states with high taxes and wealthier taxpayers who itemize deductions on their taxes, according to The New York Times.
Hucker cited an estimate from the Government Finance Officers Association that eliminating the deduction would raise the taxable income of Montgomery County residents who use the deduction by an average of $18,247.
He added the money taxpayers save is used to “cover their mortgages and car payments, buy food and clothing, save for retirement, and put their kids through college.”
Congressional Democrats have pushed back on any efforts to end the deduction. Van Hollen (D-Md.) said Wednesday the deduction was put into the tax code to ensure that “folks who are paying state taxes are not double taxed.”
He accused Republicans of putting forth a proposal that will result in “tens of millions of Americans” getting a tax increase.
“Middle-class taxpayers across the country are going to take a big hit on this,” Van Hollen said.
Republicans may be hearing the pushback.
On Wednesday, House Ways and Means Committee Chairman Kevin Brady (R-Texas) said a compromise could be reached to allow individuals to write off property taxes, but not state and local income or sales taxes, according to the Los Angeles Times.
The paper noted that eliminating the deduction could generate as much as $1.8 trillion over the next 10 years and “help pay for the large tax cuts in the Republican plan that, based on details so far, are focused on corporations and the wealthy.”
Van Hollen said one proposal in the Republican plan includes allowing American corporations in China to deduct the taxes they pay to China. He called it a “hypocrisy” to allow corporations to deduct taxes from other countries, but take away Americans’ ability to deduct state and local taxes.
