Column: Californians would love for Kamala Harris to steal this Trump idea

By George SkeltonCapitol Journal Columnist

Sept. 22, 2024 3 AM PT

SACRAMENTO — Kamala Harris already has stolen one idea from Donald Trump. Now she should pilfer another, helping middle-class families in California and other high-tax states.

Forget pride of authorship. If an idea is good politics — maybe even good policy — latch onto it. This is election season. Be open-minded and recognize that even a campaign opponent — even the contemptible Trump — can occasionally be onto something worthwhile.

Harris should copy Trump’s promise to restore the federal tax break for state and local taxes — SALT in government lingo — if for no other reason than it would dramatically help millions of fellow Californians.

The vice president has already established a precedent for campaign thievery.

Last month, Harris adroitly adopted Trump’s proposal to exempt service workers’ tips from federal income taxes. She simultaneously picked up the endorsement of the powerful Culinary Workers Union in Las Vegas, which is loaded with restaurant and hotel workers.

Nevada is one of seven closely contested battleground states that are expected to decide who wins the presidency on Nov. 5.

Never mind that the idea of making tips tax-exempt has flaws. Many tipped workers earn so little they don’t owe any federal income tax. So they’d get no benefit.

Anyway, tips are income. Why should one income source be tax-exempt but not another?

But exempting tips probably matches reality. I suspect all those tips aren’t being reported as income anyway. They’re part of the underground economy. And is the Internal Revenue Service bothering to nab these “cheaters?” Doubtful. It really should be focused on uncovering big-time tax fraud.

The SALT idea also has critics.

First, the background.

Trump and congressional Republicans gutted the tax break in 2017. Now Trump believes it’s politically beneficial to restore it as he attempts to attract middle-class voters.

“I will turn it around, get SALT back, lower your taxes and so much more,” Trump wrote last week on his social media platform, Truth Social. He reiterated the pledge later at a New York campaign event.

“Trump is making an absolutely empty promise,” contends Rep. Katie Porter (D-Irvine), a leading advocate of reviving the SALT deduction. “He made this mess with SALT.”

Trump needed money from the middle-class to help pay for his 2017 corporate tax cuts. So he and GOP members of Congress placed a $10,000 cap on the deduction of state and local taxes.

Before that, we could deduct all of our state income and local property taxes on federal returns. The average SALT deduction in California had exceeded $18,400. In the cap’s first year, Californians who itemized deductions were hit with a total extra tax burden of $12 billion, the state Franchise Tax Board reported.

High-tax blue states led by Democrats were particularly slammed by the GOP legislation. It wasn’t a big deal in many red states with low taxes or no income levies at all, such as Texas and Florida.

California’s then-Gov. Jerry Brown charged that Republican congressional leaders were “wielding their power like a bunch of Mafia thugs.”

Much more recently, Republican Rep. Mike Garcia of Santa Clarita asserted that the SALT cap was “a legislative middle finger to the middle-class families of our community. It’s penalizing blue states, which I live in.”

In 2021, Gov. Gavin Newsom and six other Democratic governors sent President Biden a letter urging him to “undo the cap.” Nothing came of it.

“Capping SALT was based on politics, not logic or good government,” the governors contended. “This assault disproportionately targeted Democratic-run states.”

Critics contend that eliminating the SALT cap — or even raising it, say, to $80,000 — would benefit mainly the wealthy. Wrong.

It would help any taxpayer who itemizes deductions when filing federal income taxes, especially a homeowner who pays property levies. In California, that’s a few million.

What’s considered rich in some states is middle-class in much of high-cost California where housing often is unaffordable. A higher property tax deduction could be a big help.

True, people with greater means would save the most tax dollars. But it’s relative. The savings for the middle-class could be more meaningful.

I suspect that many critics of the SALT deduction are renters who have little to itemize and they take the standard deductions. One positive feature of the Trump tax act was that standard deductions were nearly doubled. So not all of that tax scheme should be scuttled.

Another complaint about the SALT deduction is that it subsidizes taxes in high-tax states such as California, New York and New Jersey.

“The states that get more from the federal government than they pay in taxes are largely red states. The states that get less from the federal government but pay more taxes are largely blue states,” says Rep. Ted Lieu (D-Torrance), who has tried to restore the SALT deduction and gotten nowhere.

“Blue states subsidize red states. We should be trying to lower costs for all middle-class families.”

Porter has tried hard to restore the tax break. She introduced a bill that would have eliminated the cap for all taxpayers making less than $400,000 annually.

“It never saw the light of day,” she says.

“There wasn’t the commitment on the part of either the Democratic or Republican leadership,” she contends. “That’s just the fact. Because if they had wanted [to alter the cap] they would have put the bill on the [House] floor for a vote.”

And that makes sense.

Porter will be leaving Congress after this year. She ran for the Senate and finished third in the primary, not qualifying for the November ballot.

The Trump tax act — with the SALT cap — will expire after next year unless Congress renews it. There’ll be a fight over what parts to save and which to junk.

Harris should join Trump in promising to crush the cap. It would be good politics and even better policy.