Suffolk County residents pondering how to vote in November should remember the adage attributed to the famed House leader Sam Rayburn: "Watch what they do, not what they say."
In 2017, the Republican Congress capped the State and Local Tax (SALT) deduction without holding customary hearings. Then-President Trump eagerly signed it. This cap has severely hit Suffolk residents' net income and the region's economy.
The Trump tax act slashed the corporate tax rate from 35 to 21 percent and reduced the tax rate on the highest-earning 5 percent of households. To help pay for these cuts — estimated at $1.6 trillion over their 10-year life — the law limited SALT deductions to $10,000.
Losing that tax deduction hardly affected the wealthiest taxpayers because they are separately subject to the alternative minimum tax. The biggest hit was to middle-income homeowners, especially those in New York State, along with five other states: California, New Jersey, Illinois, Massachusetts, and Connecticut — all of them higher-income, higher-cost-of-living states. None of them supported Trump for president in 2016.
Many middle-income families in Suffolk County are now paying more, not less, in federal income taxes than they did before the Trump tax act. We estimate that Suffolk County homeowners with a household income of $150,000 and a home worth $700,000 pay about $3,000 in additional federal taxes because of the limit on deductions. Their extra taxes are much higher if their income or home value is significantly higher.
The SALT cap also affects services, because state and local taxes cost more to taxpayers when they are paid with double-taxed dollars. Howard Chernick, an economist with the City University of New York, estimates that the cap raises the effective cost of providing public services like schools and police protection by about 15 percent in Northeastern states. It also siphons hundreds of millions of dollars out of Suffolk County's economy each year. This money would otherwise circulate in our local communities, improving the standard of living of all Suffolk residents.
This coming year we have a rare opportunity to reverse this egregious surtax. Many provisions of the Trump tax act expire in 2025. Senate Majority Leader Chuck Schumer has said he won't allow the cap on the SALT deduction to be renewed, but he can keep this commitment only if he has a Democratic majority in both the House and Senate.
Congressional races on Long Island will be pivotal in determining which party controls the House in 2025 and therefore whether Congress will renew or reverse the cap on SALT deductions. Democrats John Avlon, running in Congressional District 1, which includes East Hampton, and Tom Suozzi in District 3 are both strongly committed to ending the cap.
The case against the SALT deduction cap is simple. Taxpayers shouldn't pay tax on income they already paid out in taxes to their state or local governments. That's why the uncapped SALT deduction has been part of the income tax code since it was adopted in 1913. Limiting it was a Trump budget trick to help pay for huge tax cuts for high-income households and corporations. It hit New York State hard, even though we in New York every year pay far more per capita in taxes to the federal government than we get back.
In November, if you want to end the SALT cap and reduce the tax burden on homeowners paying for important state and local services, vote for John Avlon in District 1 or Tom Suozzi in District 3.
Frank Braconi served as the chief economist for three New York City comptrollers and is now an adjunct professor at New York University's Schack Institute of Real Estate. John Tepper Marlin of Springs was his predecessor for three previous comptrollers and was a federal economist under four presidents. His most recent book is "Under Nazi Noses: How a Dutch Banker Heisted $1 Billion to Fight Hitler."