Bipartisan group of lawmakers urge Treasury to keep state and local tax deduction

A bipartisan group of lawmakers is urging the Trump administration to keep the deduction for state and local taxes, after the White House proposed eliminating it in its tax plan.

Reps. Leonard Lance (R-N.J.), Bill Pascrell (D-N.J.) and 68 other House members from high-tax states argued that eliminating the deduction would disproportionately burden their constituents.

“The elimination of this deduction unfairly penalizes residents in high-tax states like New York, California, Illinois, and New Jersey, where middle-class families can least afford another tax increase,” the lawmakers said in a letter sent Monday to Treasury Secretary Steven Mnuchin.

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The tax plan that the White House released in April proposes eliminating the state and local tax deduction and all other itemized deductions except those for mortgage interest and charitable giving. Mnuchin has said that the administration backs eliminating the state and local deduction because it doesn’t think the federal government should be subsidizing states.

The tax plan House Republicans released last year similarly would scrap the state and local deduction.

But the letter shows that Republicans are not completely united on every tax-reform issue. Besides Lance, several other Republican lawmakers signed the letter, including Reps. Tom MacArthur (N.J.), Rodney Frelinghuysen (N.J.) and Claudia Tenney (N.Y.).

The lawmakers urged Mnuchin to reconsider scrapping the deduction because their states “are economic engines that deliver disproportionately more revenue to the federal government than they receive back, paying more for services delivered to the country at large.” 

They noted that groups including the National Governors Association, the U.S. Conference of Mayors and the National Association of Realtors also support keeping the state and local deduction.