This newspaper has long argued that Democrats should leave in place a cap on deductions that wealthy taxpayers can claim based on their state taxes — the one good part of the Republicans’ 2017 tax-cut package. Now Democrats are nonetheless on the verge of dramatically raising that cap, a move that is being rightly criticized as a gift to the rich. It’s not too late to get it right and leave the cap alone.
The 2017 tax cuts were a boondoggle that will cost America for years, all so the GOP could reward its wealthy benefactors. The claim that the cuts would pay for themselves through economic growth was always bunk; the cuts are now estimated to add almost $2 trillion to the deficit over a decade.
But the Republican coddle-the-rich plan did include one reasonable provision: a cap of $10,000 on the amount that taxpayers could deduct from their federal taxes based on what they pay in state taxes. It takes a good deal of wealth to rack up a $10,000 state tax bill, so that provision would only hit the rich. Democrats alleged that the provision was meant to punish blue states like New York and California, which have both lots of rich people and high state taxes.
