SALT Will Be Ongoing Discussion: Rep. Moore on Tax Bill
Rep. Blake Moore (R) Utah discusses the US House Ways and Means Committee passing its tax bill along party lines without resolving the SALT cap. He talks about how the government possibly will plan to pay for no taxes on tips, no taxes on overtime, and the latest on SALT. Representative Moore also weighs in on whether or not the debt limit will impact any discussions. He speaks with Kailey Leinz and Joe Mathieu on the late edition of Bloomberg's "Balance of Power." (Source: Bloomberg)
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Hedge Funds Face California Rebuke Over Role in Wildfire Claims
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Half of the bond market is US Treasurys. Why it's 'not healthy.'
Half of the bond market is US Treasurys. Why it's 'not healthy.' Show Caption Hide Caption Trump summons Fed's Powell to tell him he's wrong on rates U.S. President Donald Trump called Federal Reserve Chair Jerome Powell to the White House on May 29 for their first face-to-face meeting since he took office in January and told the central bank chief he was making a "mistake" by not lowering interest rates. Over the past 12 months, about half of all debt in the U.S. bond market has been Treasurys – bonds and notes issued by the federal government. That's according to a June 8 research note from Torsten Sløk, the chief economist for money manager Apollo. 'This is not healthy,' Sløk wrote. 'Half of credit issued in the economy should not be going to the government.' As USA TODAY has previously reported, the growing U.S. budget deficit has caught the attention of investors in the bond market. The deficit is the consequence of revenue – taxes, mostly – not keeping up with spending. As it increases, the government issues more debt to plug the hole, and as supply rises, the government needs to pay more to attract demand from investors. President Donald Trump's proposed tax bill would exacerbate that dynamic, swelling the deficit by an estimated $2.4 trillion over the next decade, according to the nonpartisan Congressional Budget Office. More: Treasury bond yields are surging as the Trump tax bill progresses. Here's why it matters. Since all kinds of credit products, such as mortgages, are linked to the important U.S. Treasury market, those higher borrowing costs ripple through the economy. Sløk has written previously about the concerns over the power dynamic between the government and bond investors. Some analysts are concerned that investors may become what's sometimes called 'bond vigilantes' – demanding certain fiscal conditions as a condition of buying a government's debt. Overseas investors own nearly one-third of outstanding Treasury debt. Sløk's June 8 analysis is a reminder that the Treasury's mounting debt has many ripple effects. 'The consequence is that investors need to allocate more and more dollars to finance the government rather than financing growth in the economy through loans to firms and consumers,' Sløk wrote. Read next: The White House's tax bill will consider SALT (again). What could that mean for you?
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an hour ago
- Yahoo
The White House's tax bill will consider SALT (again). What could that mean for you?
As President Donald Trump's sweeping tax bill inches through Congress, one of its key sticking points hits Americans directly where they live. The state and local tax deduction – often abbreviated as SALT – was a political flashpoint in the passage of the 2017 Tax Cuts and Jobs Act and is shaping up to be so again in 2025. As many Americans struggle with higher costs for housing, property tax relief may be one means of easing the burden – even as some observers say taxpayers across the country shouldn't be on the hook for decisions made in other states and localities. SALT refers to the ability to deduct taxes paid to state and local governments from an individual's federal tax bill. The 2017 legislation capped that amount at $10,000, an amount that many taxpayers in higher-tax states easily exceed. At the time, government officials in Democratic-leaning states condemned the cap. Then-Gov. 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'If you look at states like California, New York, New Jersey and so forth that get impacted by this, it's not 100% obvious why some of their amenities and other programs should be subsidized by folks in Ohio and Oklahoma,' said Kent Smetters, a professor at the Wharton School of the University of Pennsylvania and faculty director of The Penn Wharton Budget Model. Smetters believes a key reason property taxes are so high in some higher-income states is protective zoning, which privileges existing homeowners at the expense of new development. 'The so-called 'NIMBY-ism.' Zoning alone in those states drives up property values and drives up property taxes.' More: Why is housing so expensive? There simply aren't enough homes. But as Lawler's op-ed notes, many of those states are 'donor' states, sending more money to the federal government than they receive in the form of spending. Some advocates note that property owners around the country stand to benefit if the cap were raised or eliminated, no matter what state they live in. An analysis from the National Association of Realtors, a lobby group, found that 9.4% of all taxpayers across the country claimed the SALT deduction in 2022. The analysis also shows a breakdown for each congressional district in every state around the country. It's important to note that the legislation is still far from the finish line. Once it gets through the gauntlet of the House, it is expected to go through committees and then a floor vote in the Senate. The policy details may be tweaked at any point along the way. No matter how popular the idea of an expanded deduction may be, Smetters believes few taxpayers actually benefit from it now, given other changes that were made at the same time to the alternative minimum tax and the marginal tax rates. What's more, he said, the cost in lost tax revenue to allow the cap to rise to $30,000 would be $225 billion over 10 years, roughly comparable to the costs of no tax on overtime, no tax on tips and no tax on auto loan interest, other provisions in the overall proposed bill. William Gale, co-director of the Tax Policy Center, a joint venture of think tanks the Brookings Institution and the Urban Institute, believes lawmakers will reach some compromise to continue some sort of cap, because passing no legislation would result in the deduction reverting to unlimited. 'It seems like there will be room for a compromise,' Gale told USA TODAY. Yet the overall legislation is likely to be a negative for the housing market, Gale noted. A May analysis from the nonpartisan Budget Lab at Yale found that the tax bill under consideration by the House would add $3.4 trillion to the debt over the 2025-2034 window and $15.3 trillion from 2025 to 2055. 'The indirect effect of this is that the deficit will raise interest rates and that will flow through to the mortgage markets,' Gale said. 'It's hard enough in the housing market with interest rates where they are now.' The 2017 legislation prompted many residents of higher-tax states to prepay their 2018 taxes in 2017. A similar push may take place this year. Some financial advisers are already counseling clients to consider paying state and local taxes in early January 2026, when the expanded cap may be in effect. This article originally appeared on USA TODAY: SALT tax deduction up for debate (again). What could it mean for you? Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
