Pelosi, Democrats using coronavirus to push for big tax cuts for blue state residents

Well, she’s at it again.

After jamming hundreds of millions of dollars of pork projects into the recently passed $2 trillion stimulus package, including  million for the Kennedy Center, House Speaker Nancy Pelosi is now pushing for a costly tax cut.

But instead of passing tax reform legislation that would benefit everyone, Pelosi is pushing a proposal that would primarily help residents in high-tax regions, many of which are located in California, New York and other deep-blue states.

Here’s how the Pelosi tax cut proposal would work: Under current law, Americans can deduct up to $10,000 for the state and local taxes they pay every year, a provision commonly called SALT. Pelosi wants to roll that provision back so that filers can deduct significantly more of their state and local taxes from their federal tax bill, and she suggested it could  , too, so filers could receive money back for taxes paid in 2018 and 2019.

A spokesperson for Pelosi told The New York Times the proposal would be “tailored to focus on middle-class earners and include limitations on the higher end,” but most people in the middle class don’t pay enough in taxes to qualify for SALT. of those who would receive a tax cut if the SALT cap were eliminated earn at least $100,000, and many earn much more than that. 

Of those that would benefit from eliminating SALT, the vast majority live in states where the Democratic Party is popular. That’s why many blue-state progressives and socialists have been screaming to eliminate the cap since it was imposed as part of the Republicans’ 2017 tax cut reform legislation.

Earlier this week, New Jersey Gov. Phil Murphy, a liberal Democrat,

Reducing taxes can be an effective way to provide people with additional wealth. But eliminating or scaling back SALT wouldn’t help most of the millions of people who are losing their jobs every week because of the coronavirus crisis, since relatively few tax filers take advantage of it. And of those that do, virtually none are in the working class — the group hit the hardest by the crisis. 

If Pelosi wants to cut taxes to help those struggling in this difficult time, she should cut taxes for everyone in the hardest hit tax brackets, not just those who live in states where her political party is popular.

For example, permanently expanding tax deductions for student loan borrowers would help many taxpayers under 40 years old, and permanently reducing payroll taxes would significantly assist lower- and middle-income workers across the country. 

Of course, any tax reductions should be offset by permanent cuts to long-term government spending — something Democrats, Republicans and President Trump seem completely disinterested in doing, despite the fact the federal government was on track to have a $1 trillion deficit in 2020 before the coronavirus outbreak.

Pelosi and her liberal allies in Congress never let a good crisis go to waste, and, apparently, this massive crisis is no different. 

Justin Haskins (Jhaskins@heartland.org) is the editorial director and a research fellow at The Heartland Institute, a conservative-libertarian think tank based in Arlington Heights, Ill., that focuses on social, economic and environmental issues and promotes free-market policies. Follow him on Twitter @JustinTHaskins.