June 20, 2019

Face It: You (Probably) Got a Tax Cut

The SALT cap definitely had a bigger effect in those states. But that doesn’t mean most of their residents saw a tax increase.

For one thing, the two-thirds of Americans who took the standard deduction in previous years weren’t taking the SALT deduction, or any other itemized deduction. And most households earning less than $75,000 — as about two-thirds of households in New York State do — were comfortably under the $10,000 cap.

Paradoxically, many higher-income households weren’t getting the SALT deduction, either. That’s because the alternative minimum tax effectively wiped out many deductions, including SALT, for couples earning more than about $250,000 a year. The tax law significantly defanged the A.M.T., meaning most of those households ended up getting a bit of a tax cut.

The SALT cap did hurt families who earned enough to pay a lot of state and local tax but not enough to be affected by the A.M.T. (Other factors, like how people earned their money, also make a difference.) A Treasury Department audit estimated that 11 million taxpayers fell into that category.

But just because people were bitten by the SALT cap doesn’t mean they were net losers under the law. The law doubled the child tax credit, for example, and made it available to more taxpayers. It also cut marginal tax rates and changed the treatment of some business income.

“A lot of people who are very angry about the SALT were not thinking about it in the context of the stuff that actually benefited them,” Mr. Gleckman said.

“You can construct specific examples of situations” where people paid more, he added, “but they are very specific and over all pretty unusual.”

About the survey: The data in this article came from an online survey of 9,716 adults conducted by the polling firm SurveyMonkey from April 1 to April 7. The company selected respondents at random from the nearly three million people who take surveys on its platform each day. Responses were weighted to match the demographic profile of the population of the United States. The survey has a modeled error estimate (similar to a margin of error in a standard telephone poll) of plus or minus 1.5 percentage points, so differences of less than that amount are statistically insignificant.

Article source: https://www.nytimes.com/2019/04/14/business/economy/income-tax-cut.html?partner=rss&emc=rss

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