After Senate Minority Leader Chuck Schumer blasted the Republican tax plan as a potential multibillion-dollar boon for President Donald Trump and members of his cabinet, the Republican National Committee responded with a blast of its own:
Schumer, a New York Democrat, is seeking to preserve a tax break that he used to deduct $58,142 in state and local income taxes on his 2016 federal return, said RNC spokesman Blair Ellis. Ellis called it “peculiar” that Schumer is working to preserve the state and local tax deduction, which tends to benefit high-earners who live in high-tax states.
But it’s “not surprising as he is personally profiting off the deduction financially,” Ellis said in an email. In all, deductions for taxes paid made up about 80 percent of Schumer’s itemized deductions last year, according to his tax return.
Matt House, a spokesman for the senator, responded Thursday by saying that a GOP proposal to eliminate the state and local tax deduction would hurt millions of middle-class families, “all to give the wealthiest millionaires and billionaires, and President Trump’s swamp cabinet, a tax cut.”
The tit-for-tat comes as lawmakers are debating the so-called SALT deduction, which allows federal tax filers to write off the amounts they pay in state and local taxes. The tax break is used most heavily in states that tend to vote Democratic, like Schumer’s New York. But House Republicans in high-tax states have also called for preserving the deduction in some form, and Trump’s administration -- which proposed eliminating the break in April -- has indicated that it’s open to negotiations.
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The Republican tax plan gained momentum Thursday as GOP senators approved a budget resolution that’s a key precursor to drafting actual legislation.
The fate of the SALT deduction is important; repealing it would generate an estimated $1.3 trillion in revenue over 10 years, helping to offset the deep tax-rate cuts that Trump and congressional Republicans have proposed for businesses and individuals.
While middle-income taxpayers do indeed take advantage of the SALT break, most of the benefit goes to higher earners, according to the Urban-Brookings Tax Policy Center. If it’s repealed, roughly 90 percent of the resulting tax increase will fall on taxpayers with incomes above $100,000, the Washington policy group found. About 40 percent would be paid by those who earn more than $500,000 a year, the group said.
Schumer would fall into that second group -- barely -- according to his 2016 tax return, which he has made public. The document shows that Schumer and his wife, Iris, reported adjusted gross income of $509,218. They deducted $58,142 in state and local income taxes and $10,100 in real estate taxes, according to the return. In all, they listed itemized deductions of $85,123, taking their taxable income to $424,095. They paid total taxes of $134,727 -- including household employment taxes and an alternative minimum tax, or AMT, of $14,467.
The AMT is essentially a parallel way of determining a taxpayer’s bill -- aimed at preventing taxpayers from winnowing down their tax obligations excessively. The Republican tax framework also proposes to abolish it.
It’s unclear whether or how Trump has used the state and local tax deduction. He departed from roughly 40 years of tradition for presidential candidates by refusing to release his tax returns during the 2016 campaign. Trump has said he’s under a federal audit and won’t release his returns until the audit is over.
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