President Trump's remaining friends in the world of New York City real estate have apparently been buzzing in his ear about the impact of his decision to eliminate the SALT deductions as part of his tax-reform plan, because as real-estate prices in New York City and in other tony blue-state markets have started to slide, the president told a group of reporters in Washington that he's considering reinstating the deductions.
As a reminder, a provision in the 2017 tax plan capped deductions for state and local taxes at $10,000 for taxpayers who itemized their deductions, a move that was seen as disproportionately punishing blue states, where property values are typically higher, and therefore, property taxes more expensive. At the time, the administration defended eliminating SALT as ending a federal subsidy to local taxpayers in pricier markets. Or as Trump put it: "It makes all states the same."
During comments to reporters, Trump said he would be "open to talking about" the cap, which is widely opposed by lawmakers - both Republicans and Democrats - from blue states like his home state of New York, and New Jersey.
Currently, 12 states including Connecticut, New York, New Jersey and Maryland are challenging the SALT cap in federal court, arguing that Republicans in Congress and the president discriminated against their states for "political purposes," according to the Stamford Advocate.
But Trump expressed surprise that the SALT issue had gained traction among middle-class taxpayers, saying that "it affects wealthy people."
"There are some people from New York who have been speaking to me about doing something about that, about changing things," Trump said. "It's been severe on them."
But the president insisted that any move to change the tax reform plan to eliminate the SALT cap would need to be started by Democrats in the House.
“It would have to go through (a congressional) committee; it would have to be started by Democrats in the House,” he said. “I’d be open to talking about it. There are some people talking to me about this.”
Of course, if the SALT cap is eliminated, it would blow out the deficit even further (unless some other offset is found). But budgetary implications aside, somewhere desperate NYC real-estate broker, baffled by the lack of potential buyers bidding on their inventory, just issued a heavy sigh of relief.