The Big Reveal: ALEC First Look at the Tax Bill
State and local tax deduction one of the last sticking points
The House Ways and Means Committee released the much-anticipated tax reform legislation that preserves much of the original intent of lowering rates, simplifying the code and making it fairer.
“ALEC members have long supported an end to the state and local tax (SALT) deduction. SALT allows states to spend beyond their means, a practice that simply shouldn’t be,” said ALEC CEO Lisa B. Nelson. “It is good to see these first strides toward state and local fiscal responsibility in the first draft of the new tax code.”
ALEC has led the charge on eliminating the SALT deduction with 140 state legislators from 36 states signing a letter to Congress to that effect. In one of the big compromises, the property tax deduction will be capped at $10,000 in a concession to the high-tax states like New Jersey and New York.
Early in the tax writing process, Jonathan Williams, chief economist for the American Legislative Exchange Council and vice president of its Center for State Fiscal Reform, was invited by Chairman Kevin Brady of the Ways and Means Committee to provide testimony. He has remained involved throughout the tax writing process. “For years, states have led the way by providing substantial tax cuts. Federal efforts should follow the lessons learned at the state level,” said Jonathan Williams, ALEC chief economist. “Chairman Brady’s tax reform outline shows a pathway to provide real tax relief and restore the health of the American economy. ALEC members applaud the start of this long, but essential tax reform process.“
Based on its principles of limited government and free markets, ALEC has been a leader in reforming state tax codes. Its legislative members have led the fight across the country. Recently, as we outline in our annual report, Rich States, Poor States, North Carolina reformed its tax code — prioritizing spending, reducing business taxes, killing the death tax and putting more money back into the pockets of its citizens. The state legislator responsible for much its successes is incoming ALEC national chairman Rep. Jason Saine. His advice to the Ways and Means Committee: “Put on your earmuffs, move forward because you know you are right. This is what America needs to be competitive. This is our opportunity to put America first again and we can do it through reforming our tax code.”
The Ways and Means tax bill will be hotly debated over the next six weeks as the Republicans in the House and Senate win over enough votes for passage. They need only to look to the states, our laboratories of democracy, for guidance.