Banks ‘real risk’ Democrats use new reporting rule to fund SALT relief, analyst says

As some Democratic lawmakers in high-tax states continue to push for their party’s $ 3.5 trillion spending plan to include what has been called SALT relief, one of the problems has been the cost of such relief.

But Washington could end up with a solution – using a new reporting rule for banks to cover the cost of relaxing the $ 10,000 cap on federal income tax deductions for state taxes and premises that was put in place by the Republicans big overhaul in 2017.

“We are seeing a growing interest in using income from increased bank tax returns to offset the increased amount of state and local taxes (SALT) that homeowners can deduct,” Jaret Seiberg said Wednesday, Cowen Washington Research Group analyst.

“It is too early to say for sure whether this will be adopted as part of the package. But that seems to be the type of deal that Congress makes when putting these packages in place. That’s why we see a real risk of it being included, ”added Seiberg.

Related: Lawmakers launch bipartisan “SALT caucus”, stepping up pressure to remove cap on federal deductions for US state and local taxes

Opinion: Biden may have to forgo SALT cap to get his tax plan passed through Congress

The possible new tax filing rule for banks would require institutions to notify the Internal Revenue Service of annual customer inflows and outflows for accounts as low as $ 600. Officials in the Biden administration have repeatedly advocated for stricter requirements, saying a change could see more people pay the required taxes and generate up to $ 460 billion in revenue over 10 years.

But after opposition from KBE banks,
+ 0.26%
and other lobby groups, House Democrats have kept such a rule out of their proposed tax policy changes this week, though a scaled-down version may still emerge from ongoing talks between officials in the House. administration and Congress, a Wall Street Journal article said Wednesday.

Any income generated from a bank reporting measure could help pay for a SALT fix, a Bloomberg report said.

Related: House Democrats want “slightly less aggressive” tax hikes than Biden’s proposed

And see : Debt limits, social spending and infrastructure battles loom in “particularly frenetic time” for Congress

“We think the idea would be to increase the maximum SALT deduction to $ 50,000, from $ 10,000,” Cowen’s Seiberg said.

“We suspect that many voters in coastal communities will welcome a higher SALT deduction cap. Still, that probably only inflates home values ​​further, which is why we only see a limited benefit for HOMZ housing,
+ 0.80%
because a limited supply already leads to higher prices, ”added the analyst.

Related: Home prices rise at a record pace for the third consecutive month

Read also : Oil industry avoids pain in House Democrats’ tax plan, but tobacco and vaping are affected

More: House Democrats provide electric vehicle tax credits of up to $ 12,500, as Republicans, Tesla and Toyota voice objections

About Therese Williams

Check Also

Less Joe Biden is fine with the Democrats

Less than Biden great with Dems For American voters, the less they see Joe Biden, …

Leave a Reply

Your email address will not be published.