Gary Cohn Says Cutting SALT Deduction Will Be A Part Of Republican Tax Reform Plan

Tyler Durden's picture

In the latest sign that the Trump administration is standing by one of the most controversial elements of its tax-reform program over the vociferous objections of blue-state Republicans in the House and Senate, Gary Cohn reportedly played down the impact of eliminating the deduction for state and local taxes - known as the SALT deduction - during a meeting with a partisan group of lawmakers, according to Politico Playbook.

Cohn met with the Problem Solvers caucus on the Hill this morning to discuss the administration’s tax reform agenda. Sources told Politico that Cohn said the proposed elimination of the SALT deduction would remain in the final bill, and furthermore, that it would probably be less controversial than the administration’s plan to reduce the “pass through” rate - the rate at which many small businesses are taxed - to 25%.

Cohn's remarks are the latest sign that the tax-reform bill's architects have yet to reach an agreement on several key issues. As Bloomberg reported last night, Rep. Peter Roskam, a key House lawmaker on taxes, said it’s important to him that Congress reach a compromise on state and local tax deductions, rather than repealing it altogether. And a large group of blue-state Republicans appear to be backing him up. Since blue states tend to have higher local taxes, some Republicans claim the bill unfairly targets Americans based on where they live.

Roskam, chairman of the Ways and Means tax policy subcommittee, said Republicans are closer to a decision on the so-called SALT deduction, but it’s still unclear to him how the full committee will treat the tax break.

The uncertainty over SALT, which is one of the few revenue boosters in the nine-page Trump tax plan outline, is believed to be one of the most divisive elements of the Trump plan, though the administration has struggled to find a suitable alternative that would similarly reduce the impact on the deficit. Treasury Secretary Steven Mnuchin has also criticized the SALT deduction as an example of the federal government unfairly subsidizing the states.

Right now, lawmakers are trying to find a way to keep tax reform from adding $1.5 trillion to the budget deficit over the coming ten years.

Cohn’s remarks highlighted the considerable uncertainty surrounding what the final tax-reform bill will look like. And to be sure, the SALT deduction is hardly the only proposal for which Republicans involved with the process of writing the bill have given conflicting statements.

House Ways and Means Chairman Kevin Brady insisted Wednesday that changes to retirement savings are coming, despite President Donald Trump’s repeated promises this week that no changes would be made to the 401(k) tax-deferral process. A proposal circulating among House Republicans would impose new limits on the upfront tax break for 401(k) savings as a way of generating additional federal revenue to offset money lost by the rate cuts and other proposed changes.

These contradictions have helped validate suspicions that the likelihood of tax reform passing by year end is far from a certainty.
 

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swmnguy's picture

What leads you to believe Republicans are opposed to high government spending?  I know they say they are, but I mean in practice.  The Dems and the Repubs only disagree as to who should be the beneficiary of the government spending.  The Repubs are more punitive against people who work for W2 payroll income, while the Dems prefer to punish rent-seeking a little bit more.  Neither is willing to cut a penny spent on State Violence.

ReturnOfDaMac's picture

wish I could uv you +1000

Pasadena Phil's picture

Eventually, CA will run out of people like me. I also expect the Silicon Valley and Hollywood scene to implode which will leave mostly illegals on welfare. The only salvation for CA is for it to self-destruct. I won't be here when it happens and I won't be taking any CA attitudes that I never had. I am a small-town guy from New Hampshire who picked himself up by his own bootstraps. You never outgrow the pride and satisfaction of being self-sufficient.

ReturnOfDaMac's picture

Get the f..k outta here, there are 40M people in the state.  Your little silly assed contribution(if any) won't be missed at all.  Got back to New Hampshire and be self-sufficient there.  Tired of hearing about red-state transplant fuckers who enjoy having a world class state but bitch about maintaining it.  Hey, I hear Kentucky follows your logic of cutting services and giving budget busting breaks to its fat-cats, maybe you can move there. Worked out great for them.  Don't let the door-knob hit ya where the good lord split ya, bye!

Mayh3m's picture

If you think that California is going to look at the people who are royaly fucked by removing the SALT provisions and say, "Golly gee! We should cut our spending and taxes to midigate this disaster!", you are a fucking retard. California has been habitually taxing the people who live there into fucking oblivion for decades, and spending money it doesnt have to justify raising taxes even higher. The fact that the Federal Government is going to HELP them do that is NOT going to stop them.

 

If I didnt have family that lived here, I would have fled this state years ago. 

hawaiian waverider's picture

Exactly.  To think the Dem CA politicians will even consider cutting spending for a millisecond is absurd.  The thought will never cross their mind.  Ever. 

Mayh3m's picture

If you think that California is going to look at the people who are royaly fucked by removing the SALT provisions and say, "Golly gee! We should cut our spending and taxes to midigate this disaster!", you are a fucking retard. California has been habitually taxing the people who live there into fucking oblivion for decades, and spending money it doesnt have to justify raising taxes even higher. The fact that the Federal Government is going to HELP them do that is NOT going to stop them.

 

If I didnt have family that lived here, I would have fled this state years ago. 

Doubleguns's picture

Why should I halp Kalifornica pay illegals to live there by allowing them to tax their folks at a high rate and steal fed taxes from the rest of us. Eliminate SALT and everyone pay the SAME damn federal taxes. You can spend all you want in your state for anything you want but do not screw me with your dumb choices and crazy spending. 

 

 

Pasadena Phil's picture

That seems to be a concept the many communists who post hear are impervious to. Everyone wants their own free cheese but balance the budget taking everyone else's free cheese away. Maybe the key is to say "fuck" and "J-o-o-o-o-o-o-o-s" enough times to penetrate their brains.

I am thoroughly enjoying my many "down twinkles" from all of the commies on this thread. Keep'em coming comrades!

panhead20's picture

As a CA resident, I am tired of subsidizing other states (red states) federal programs. CA sends more taxes to Washington than it receives from the federal spending.

swmnguy's picture

Same here in Minnesota.  High taxes, high services, high revenues, high standard of living.  By contrast I have family in Indiana and Florida also.  Low taxes, utterly horseshit services, low revenues, low standard of living; fees up the ying-yang to do anything and things one pays for don't work.

Mikeyyy's picture

Yeah, and I don't want to be subsidizing hedge fund billionaires (carried interest) or 401k contributors or oil companies through their oil depletion allowance or any one of about a million things I subsidize.

 

But, tax people on taxes and you're alright with that?  'eff off.

ReturnOfDaMac's picture

Mikeyyy, I really think the trolls that are happy with this are 0.01% bots.  They have to be.  Fat-cats have bots too.  No real American in their even half-ass-right mind, red or blue pill popper thinks its ok to tax folks on taxes they pay.  Maybe we should remove the deduction for Church contributions?

ElTerco's picture

Californians are notorious for screwing *themselves*. Every single bond issue that goes on the ballot gets a yes vote, even if it is $10 billion dollars and makes no sense.

ReturnOfDaMac's picture

Sorry Pasadena, you have been thoroughly brainwashed.  For one thing, it is not up to the Fed to tell states what level of service to provide to their citizens.  If the people of California want to provide world class schools (UC, CAL etc) great.  If other states want to provide world class relition (Liberty U) great.  The other issue is that you cannot tax on a tax.  That is direct double taxation.  Taxes paid are NOT income!  What kind of idiot cannot see this? 

Move to the desert, that's where that kind of thinking belongs. You will be much happier there with the 120deg days, water resource issues, and no worries about us tree huggers.  You will not be subsidizing us, we only get back about 80 cent of each dolla we send to the district of corruption. You will be subsidizing Miss, Alabama, Kentucky and your red-state followers so you should be very happy.

Lost in translation's picture

"What kind of idiot cannot see this?"

Pasadena Phil, b.k.a. imbecile extraordinaire.

Lost in translation's picture

Retard ^

AZ has been californicated by pinheads just like you.

They sold their state capitol and other government buildings to private investors and now have to lease them back to conduct state business.  They're broke.  Phoenix has become a city in northern Mexico. 

Once the CA starts cutting back/cutting off all of the CalPERS and CalSTRS public employee fat cats AZ will be worse off than it already is, at present.

But hey, enjoy your poverty in the desert!

chemcounter's picture

HOA dues are post tax and is the same premise. Should we not allow HOA deduction?

A better solution is to eliminate federal income taxes on individuals and instead have the states pay the feds. Of course that decentralizes and takes power back to the states and the globalists will have none of that.

ElTerco's picture

Just so we are clear, HOA fees are not currently deductible.

geo_w's picture

Lucky you if your state doesn't have a state sales tax. Sucks for you if you live in a poorly run state where your politiicans buy their next vote with your state tax money. Your real beef is with your state politicians. 

MoreFreedom's picture

"They want to tax you on payments made to state taxes!  Fucking ridiculous."

No, they want states to be treated equally, and to eliminate an incentive for your state to tax you more, which is exactly what the SALT deduction is.  Eliminating the deduction, creates incentives for states to tax you less. 

ReturnOfDaMac's picture

Your name is truly misleading.  I don't WANT TO BE TREATED like Mississippi!  You don't understand living in a society vs living in the jungle and you never will.  If I wanted to live in the jungle I could go the Amazon forrest and have no worries about taxes at all, you can too!    I want to have UC/CAL, Stanford, Cal-poly etc.  Got no problem putting up bucks to educate my fellow citizens kids so they can grow up to create Google, Apple, Cisco, face-fuck, etc.  Don't want to be a red-stater and have my pick of the litter of $1.10 / hr jobs at Peckerwoods feed store  https://www.socialbakers.com/statistics/facebook/pages/detail/1801447320... Screw that.  Your ideas are retrograde and will yield exactly what we see in red-states. Don't want it, no thanks.

Automatic Choke's picture

Yet one more reason I'm glad I moved to Nevada.....

swmnguy's picture

You moved there to take the waters, right?

Gohigher's picture

I was mis-informed.

Then I bought a bar.

ReturnOfDaMac's picture

The state feels better already, stay there and please don't move back.

Madison's_Ghost's picture

'Right now, lawmakers are trying to find a way to keep tax reform from adding $1.5 trillion to the budget deficit over the coming ten years."

I'm no tax expert, but perhaps try cutting spending.  Just sayin'.

Manipuflation's picture

Another Jew Cohn?  Wasn't Roy M Cohn bad enough?

gatorengineer's picture

what you dont know a Cohn job when you see one.

2banana's picture

I am especially loving the democrats fighting tooth and nail to protect SALT and especially the Mortgage Interest Deduction (MID).

The MID basically goes to the top 10% of all income earners subsidized by the lower 90%.

Trump is going to pound these elitist democrats of the rich into dust in 2018 and 2020.

 

nomad943's picture

I call bull. Raise the landlords taxes and guess who Mr Renter gets to write a bigger check to.

techpriest's picture

Removing MID is something I would consider to be a good idea.

I can't tell you how many people will tell me "Don't pay off your house too quickly! Think of the tax savings!" Meanwhile, they somehow think paying the banks a dollar to get 20-30 cents in tax savings will make them rich. Stupid.

Once the idiotic MID is removed, the incentive will be to pay off your house as fast as you can because interest is free money to the bank, and you don't want to give the banks free money. Debt=slavery, and the tax code should not reward debt.

Mikeyyy's picture

Let's do the math on the MID, shall we?  My mortgage rate is 4%.  My state and local income tax burden is 35%.  I itemize my deductions so I deduct the interest on my mortgage.  So, 0.35 x 4% = 1.4%.

 

Deducting 1.4% from 4% equals 2.6%, which is my after-tax real interest expense.  If inflation is more than 2.6%, then the bank is essentially paying me to borrow money.  Unless inflation is much lower, then it's still close.  AND, if my home is appreciating, the leverage also works in my favor.

AND, the MID was in effect when I bought and financed the home, so I had to take it into account when doing the cost/benefit analysis.

 

So, as usual, changing the rules in mid-game unfairly impacts people like me.  Now, if you want to phase it out over 30 years, then I will listen to your argument.  But not now.

OutaTime43's picture

This is a very pro working poor/ middle class tax cut.  Suprised the GOP supports it.  They don't file Schedule A's anyway and won't be affected by losing SALT. But that doubling of the standard deduction to @12K is a nice $80-$100 per month net back in their pockets

moonman's picture

Double standard deduction but eliminate personal exemption?

techpriest's picture

When the average guy in Ohio sees an extra hundred bucks in his paycheck, he will fell better about his situation. That could flip certain key Rust Belt States back to the GOP. If that's what actually happens.

ReturnOfDaMac's picture

Rust belt states are already GOP.  Thats why they are rust-belt, GOP policies...

Lostinfortwalton's picture

They are force-feeding the MIC pig until it is about to explode. That and government-backed education loans for which there are no jobs requiring the degrees awarded to 80% of the students. The taxpayer will get handed the defaulted bill made more outsize by interest rate increases and penalities not paid.

nomad943's picture

Never met a tax cut I didnt like ... until now. If this raises my taxes I will be more than pissed.

Anteater's picture

Let's see, in just the first 10 months of Trumpistan:

Cuts $1.5 T from our paid-in Medicare TRUST FUND

Increases Pentagon-DHS budget by 10% as a unfunded deficit

Eliminates SALT deductions 

Eliminates 401ks pre-tax savings

Plans to eliminate capital gains and estates taxes for the Rich

Running a stealth $2.2 T annualized deficit nobody talks about

Coming up on default unless Debt Ceiling raised to $30T

10 months. Project that out to 48 months of Trumpistan.

Dash board me.

We are so fucked.

gatorengineer's picture

Its actually worse than you stated, but you got the jist of it..

TheLastTrump's picture

Bullshit, sock puppet. Not a mention of the money saved so far in multiple ways. :) Of course, you wouldn't know about those things since your head has been up the media's ass.

techpriest's picture

And somehow the alternative was better?

At this point, Washington is its own animal and regardless of who sits in office, the whole machine has already gone over a cliff. We're just waiting to hit the ground now.

The last 4 presidents/several Congresses could have made the needed structural changes, but they didn't.

Juggernaut x2's picture

Roskam is fighting it because he knows there will be a mass exodus of the few productive workers left in IL if property tax deduction is eliminated

nomad943's picture

Maybe they will have to stop raising property taxes 20 percent a year along with other PROGRESSIVE states.

Consuelo's picture

 

 

You can see by this latest example, that there really is no way out of a debt-induced implosion for the United States.    More than likely to be triggered not from within, but from outside where profligacy, expansionism, and reserve currency status simply run out of the fuel necessary to continue.

Seasmoke's picture

Fuck you Gary Cohn. Hope I see you walking the streets in Jersey one day soon.