WASHINGTON – Following the introduction of new IRS rules that would block critical state workarounds to harmful state and local tax (SALT) deduction caps, U.S. Senators Chris Murphy (D-Conn.) and Richard Blumenthal (D-Conn.) along with Senate Democratic Leader Chuck Schumer (D-N.Y.), and Senators Ron Wyden (D-Ore.), Bob Menendez (D-N.J.), Patty Murray (D-Wash.), Dick Durbin (D-Ill.), Jeff Merkley (D-Ore.), Kirsten Gillibrand (D-N.Y.), Cory Booker (D-N.J.), and Chris Van Hollen (D-Md.) introduced a Congressional Review Act (CRA) Resolution of Disapproval to nullify the recent IRS decision, restore states’ ability to work around the harmful caps, and allow homeowners to again fully retain their SALT deduction. While the Treasury Department blocked states' workarounds for families, the department in September 2018 issued guidance that allowed businesses to continue to benefit from these same workarounds.
“The Republicans’ tax bill has been an all-around failure for working and middle-class Americans. Capping the state and local tax deduction was a clear partisan gimmick designed to hurt states like Connecticut,” said Murphy. “Our state stepped up and approved a plan to help Connecticut taxpayers, but the IRS’s harmful new rule would block that. This CRA reverses this rule and allows our state to help homeowners from bearing the brunt of Republican antics.”
“This significant measure would empower states to provide needed relief to middle-class families who have been devastated by the Republican tax scam,” said Blumenthal. “The CRA would nullify new IRS rules that rub salt in the wound for thousands of Connecticut residents.
“As if the Trump-Republican Tax Bill wasn’t already bad enough for middle class families, these new IRS regulations are another kick in the gut to homeowners in New York State and across the country,” said Schumer. “The IRS is seeking to deny hardworking homeowners the benefit of the full SALT deduction while continuing their tax giveaway to the wealthiest few and corporations. Today, we are fighting back with a CRA Resolution of Disapproval, which is guaranteed a majority threshold up-or-down vote, would overturn the IRS’s recent attempt to block states from implementing workaround plans, and would allow homeowners to again fully receive this tax benefit. America’s homeowners deserve peace of mind.”
Under the pre-Trump tax code, taxpayers who itemized deductions on their federal income tax returns could deduct state and local real estate and personal property taxes, as well as either income taxes or general sales taxes. State and local income and real estate taxes had made up approximately sixty percent of local and state tax deductions while sales tax and personal property taxes made up the remainder. According to the Tax Policy Center, approximately one-third of tax filers had itemized deductions on their federal income tax returns.