Of all the hobby horses to ride in a crisis, Nancy Pelosi has climbed onto the richest. Even the New York Times sees through this flimsy attempt to pander to voters in the two most populous states — at a time when all other taxpayers are funding a massive relief package to rescue the economy from its coronavirus coma.
The net effect of this would be a stimulus, all right … for those earning six figures or more. And Pelosi wants to make it retroactive, too:
As lawmakers prepare for another round of fiscal stimulus to address economic fallout from the coronavirus pandemic, Speaker Nancy Pelosi suggested the next package include a retroactive rollback of a tax change that hurt high earners in states like New York and California.
A full rollback of the limit on the state and local tax deduction, or SALT, would provide a quick cash infusion in the form of increased tax rebates to an estimated 13 million American households — nearly all of which earn at least $100,000 a year.
In an interview with The New York Times, Ms. Pelosi said the next phase of an economic rescue package should include additional measures to get more money directly to individuals — like the $1,200 direct payments for low- and middle-income taxpayers that were authorized in the $2 trillion bill that President Trump signed on Friday.
That could be achieved, she said, by having Congress “retroactively undo SALT,” a reference to a cap on the state and local tax deduction that Republicans included in their 2017 tax overhaul. That limit prevents households from deducting more than $10,000 a year in state and local tax expenses from their federal tax bills.
This idea is even worse than her last attempt to stick the Green New Deal into Phase 3, delaying the bill several days. Republicans capped the state and local tax deduction (SALT) at $10,000 in their tax-reform bill in December 2017 while expanding the standard deduction to make up for the change with lower-income earners. The only taxpayers this would boost with a retroactive refund would be those who pay more than the $10,000-per-year cap in state and local taxes, and that’s not exactly the poverty-stricken.
So much for Democrats being the party of the little people, eh? Pelosi’s proposal would force taxpayers on the lower end of the scale to subsidize those refunds to high-income earners. It would be among the most regressive reactions to an economic crisis one could imagine. It would force lower-tax and more efficient states to subsidize the state and local tax burden imposed by high-tax blue states by their own policies. And it would do so at the very same time that those same high-tax states are (rightfully) demanding the lion’s share of the limited COVID-19 rescue resources.
This policy has nothing to do with economic rescue. It has everything to do with pandering to big-ticket donors in New York, California, Massachusetts, and other deep-blue states where the SALT cap bit hardest. If Pelosi digs her heels in on this for Phase 4, she will be holding relief hostage for the benefit of millionaires and billionaires just to hold onto states Democrats couldn’t lose if they tried.
This is one of the most cynical ploys seen in national politics in a very long time. It’s so bad that the New York Times can’t bring themselves to run interference for Pelosi on this idea, not in the midst of a pandemic where New Yorkers are dying by the hundreds each day. It’s not just cynical — it’s ghoulish.