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story.lead_photo.caption In this Thursday, Nov. 16, 2017 file photo, House Speaker Paul Ryan of Wis., joined by House Republicans, speaks to the media following a vote on tax reform, on Capitol Hill in Washington.

ATLANTA -- A popular deduction targeted to end in the GOP's overhaul of the tax code is claimed by more than a quarter of all filers in a majority of states, including many led by Republicans where some residents eventually stand to see their federal tax bills rise.

The exact effect in every state isn't known, in part because of differences in the Senate and House versions of the bill. But eliminating the deduction for state and local taxes stands to alter the bottom lines for millions of taxpayers who itemize.

Residents in high-tax, Democratic-led states stand to be the hardest-hit if the measure prevails. But some filers also could be left paying more in traditional Republican states.

In Arkansas, a little more than one-fifth of federal individual income tax filers claimed a deduction for state and local taxes in 2015. The deduction averaged $9,116 per filer.

In Georgia and Utah, about a third of taxpayers claim the deduction.

"It's a bad deal for middle-class families and for most Georgians," said Georgia state Rep. Bob Trammell, leader of the House Democrats. He said Republicans want to eliminate the state and local tax deduction to help pay for tax cuts for businesses and the wealthy.

How many winners and losers are in each state depends in large part on an aspect of the Republican tax overhaul that would nearly double the standard deduction -- to about $12,000 for individuals and about $24,000 for married couples.

Republicans say most tax filers would see a net benefit from that provision.

The Tax Policy Center, run by the Urban Institute and Brookings Institution, has estimated that the number of people who itemize deductions would drop by three-quarters if the provision prevails. Some of those taxpayers could see a bigger deduction under the Republican plan.

"Based on what I have seen, it might actually help some Georgians" to replace the state-and-local tax break with a higher standard deduction, said Georgia state Rep. Terry England, the Republican chairman of the House Appropriations Committee.

Yet estimates by the Tax Policy Center and a nonpartisan congressional analysis say some taxpayers eventually will end up owing more in federal taxes under the GOP plans.

The left-leaning Institute on Taxation and Economic Policy said changes to the state and local tax deduction under the House bill would contribute to one of every five taxpayers in the hardest-hit states getting a higher tax bill. While most of those states are led by Democrats, Republican-led Georgia and Utah and the swing state of Virginia are among them.

Democratic lawmakers said any initial tax relief felt by the middle class or working-class families will eventually disappear. In Georgia, for example, an estimated 9 percent of filers would pay higher taxes in 2018, rising to 22 percent by 2027, according to an analysis by the Institute on Taxation and Economic Policy.

Most tax filers currently take the standard federal deduction of $6,300 per individual or $12,600 for married couples. But some reap larger tax breaks by itemizing deductions for state and local taxes, medical expenses, charitable contributions and interest paid on home mortgages.

The state and local tax break is the largest of those. About 44 million taxpayers claimed deductions totaling around $550 billion for state and local taxes paid in 2015, according to the most recent Internal Revenue Service data.

The top 10 states with the highest average state and local tax deduction all voted for Democrat Hillary Clinton in last year's election. New York led the way with an average per-person state and local tax deduction of more than $22,000, followed by Connecticut, California, New Jersey and Massachusetts.

But when analyzed by the percentage of taxpayers claiming the deduction, several states won by President Donald Trump rank in the top third nationally. In reliably Republican Utah, 35 percent of taxpayers claimed the deduction for state and local taxes. That figure was 33 percent in Georgia and 31 percent in Wisconsin. Thirty-five states had at least one-quarter of their taxpayers claim the deduction.

Senate Republican leaders, who are seeking a major legislative victory before year's end, hope to get their tax bill, which differs significantly from the House measure, to a vote after Thanksgiving. But it is unclear whether it has enough support to pass in the narrowly divided chamber.

The state and local tax deduction is just one of many provisions targeted for change under legislation that passed in the House last week. The House version would repeal the deduction for income and sales taxes while capping the property tax deduction at $10,000. The Senate bill would end deductions for all state and local taxes.

Because of the proposal's widespread effect, debate over curtailing the deduction already is creeping into competitive 2018 elections.

Democratic U.S. Sen. Tammy Baldwin of Wisconsin has warned that repealing the deduction could lead to a tax increase for many state residents.

The left-leaning Wisconsin Budget Project has estimated that the Senate plan overall eventually would leave nearly 300,000 Wisconsin residents paying higher federal income taxes. Baldwin said the plan will disproportionately benefit corporations and the wealthiest Americans.

"That's not right, and it's not fair," she said during a news conference Friday in Milwaukee.

One of her Republican challengers, state Sen. Leah Vukmir, has signed a letter encouraging the deduction's repeal. Republican Gov. Scott Walker, a tax overhaul supporter who is seeking re-election, has been criticized by the liberal advocacy group One Wisconsin Now. The group says repealing the deduction would have "the net effect of a massive property tax increase for Wisconsin homeowners."

Utah state Sen. Howard Stephenson is a supporter of repealing the state and local tax deduction, even though a comparatively high percentage of residents in that state claim it.

Stephenson, a Republican who is president of the Utah Taxpayers Association, said he believes the deduction generally favors high-tax states to the detriment of states with a lower tax burden, such as his own.

"We don't like paying for the excesses in other states," he said.

Offering concessions to skeptical senators one by one could prove an impossible task for Republican leaders, who face restraints under Senate rules on the total size of the tax cut package.

Republicans, who control Congress and the White House, are seeking their first significant legislative achievement of the Trump presidency.

But the dynamics of the two chambers differ markedly. With the House tax bill, Speaker Paul Ryan of Wisconsin and other Republican leaders employed a command-and-control process and a rocket-speed schedule to minimize Republican dissent. The bill sailed through the House on Thursday along party lines, two weeks after it was introduced.

In the Senate, where the party's margins are much smaller and individual members are more powerful, party leaders will need to win over what could be a half-dozen or more wavering Republicans.

Senate leaders are trying to replicate Ryan's success in the House. They believe that on a core conservative issue, at a time when the party is still searching for a signature legislative victory under Trump, no senator will want to be the one who blocks the bill.

Information for this article was contributed by Christina A. Cassidy, David A. Lieb and Scott Bauer of The Associated Press; and by Jim Tankersley of The New York Times.

A Section on 11/19/2017

Print Headline: Targeted deduction popular across U.S.; In Arkansas, fifth of filers claimed it in ’15

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  • pavlov
    November 19, 2017 at 6:57 a.m.

    Why not give us a choice.....the proposed higher standard deduction of 12,000 ....or the deduction of SALT plus the ORIGINAL standard deduction of 6,300 ?

  • RBear
    November 19, 2017 at 7:16 a.m.

    Good question pavlov. My guess is Republicans are worried about the loss of tax revenue from average Americans needed to help pay for the cuts to the wealthy and corporations. This tax reform bill is a kludge of issues that are going to be VERY difficult to work out in reconciliation. The SALT deduction is just one example of eliminated deductions that affect the average American. Another is interest on student loans. This impacts young people who are trying to make a start in life

  • PopMom
    November 19, 2017 at 7:34 a.m.

    I agree with RBear. The Republicans are trying to sell this package as "tax cuts" when many of us will pay increases with the elimination of the deductions. For my family, this package would be a tax increase. As RBear pointed out, they need the revenue to pay for the elimination of the estate tax on the most wealthy and the reduction of corporate taxes. Nevertheless, the Republicans have been on tv with their propaganda show of "cutting taxes". The rates may be lower, but the taxes increase with the elimination of deductions.

  • cliffcarson
    November 19, 2017 at 8:03 a.m.

    In Arkansas the average SALT amount deducted is around $9,000 plus. Now that I am retired it won't be like it was when I was working but we are being told that we will now have to pay a Federal Tax on the amount of SALT taxes we pay. This is being done to give the high income and Corporate more money to enjoy. doesn't seem right to me. The last year I worked for a large Corporation, the employees at my Arkansas facility were told that profit Goals were not met for the year and therefore there would be no raises for the Arkansas workers. However at Corporate Headquarters, the President of the Arkansas Division of the Corporation was given a Bonus that exceeded the combined salaries of the annual salaries of the workers at the Arkansas facility . The reason stated by the Corporation was that his group had exceeded profit goals. The Arkansas facility was indeed the Cash Cow for the Corporation.

  • pavlov
    November 19, 2017 at 8:32 a.m.

    Corporations don't actually pay taxes anyway. That tax is just passed to employees, stockholders and people who buy the product of the corporation. This only makes American products less competitive. The rich already pay the vast majority of income taxes in this country (remember 49% of 'taxpayers' pay no federal income tax) so any tax cut will of course benefit them more than the average joe (as it should), however eliminating the SALT will negatively affect the rich MORE than it will the average taxpayer as they pay higher amounts in SALT.

  • PopMom
    November 19, 2017 at 8:51 a.m.

    pavlov,

    I see no reason why people should pay a lower capital gains tax for sitting on inherited wealth than people who work. The rich get many of the benefits in this society. A Stephens may pay quite a bit in taxes, but how much taxpayer money does he get from bond issues and other government contracts? The big chicken farmers, steel mills, and paper mills get to dump their wastes in our waters without paying a dime for the privilege (in most states). The Kochs get rich dumping gunk in our waters and contribute handsomely to political campaigns so that they can have this privilege. Monsanto and Dow also give handsomely so they can make money off chemicals which cause cancer and birth defects. Rich guys like Donald Trump get deferments so poor guys from the Delta can die in Vietnam. No, the rich are not getting a bad deal here. The people who get the short stick on taxes are the middle and professional classes who work hard so that people at the bottom can collect disability while they are on drugs and while the people at the top can pay off politicians to give them government contracts and lower tax rates.

  • RBear
    November 19, 2017 at 8:52 a.m.

    pavlov, the trickle down thought about taxes into products is really a meaningless one. Companies pass the savings along to shareholders in increased earnings, not in cheaper products to consumers. I know it's a noble thought, but it's about as meaningless as the thought they will also pass those to workers in wages. Those taxes are designed to provide a well-supported economy through common infrastructure, safe working conditions for average Americans, and a secure financial system for all.
    ...
    To just promote the trickle down idea while ignoring the infrastructure reality shows how little you truly understand our economy. Take away the highway system and tell me how cheap these products would really be. Take away our ports, built with additional funds from the federal government, and tell me how cheap they would be. The list goes on. But those arguments are ALWAYS excluded from right wing conversations.
    ...
    Wanna go head to head on these issues? I'm ready including a vast list on the wealthy. You parrot the rhetorical line of the right without really understanding the details.

  • GoBigRed
    November 19, 2017 at 8:59 a.m.

    Interesting way to put it Pavlov.
    Who are the 49 percent of Americans who don't pay income taxes? The vast majority are the lowest income households, the elderly and young working families with children.
    So, you are saying that it is a shame we pay people so little that they qualify to pay zero federal taxes?
    49 % ? I guess it would really upset you to know that 2/3rds ( more than 66%) of all active corporations had zero tax liability?

  • pavlov
    November 19, 2017 at 9:05 a.m.

    Probably somewhat, but not entirely true. More profitable companies DO pay better wages and benefits. Higher earnings for stockholders result in YOUR 401K, IRA or stockholdings being worth more $....and YOU pay more taxes on those holdings. YOU are better off. Taxes are still collected . America remains competitive in the world market....which increases jobs HERE.....more jobs here means more competition to hire employees which drives wages up.

  • RBear
    November 19, 2017 at 9:35 a.m.

    Pavlov, once again more rhetoric. Very few benefits from tax cuts flow into the retirement savings of average Americans and Republicans were going to shift taxes on some of those accounts in one version of the bill.
    ...
    With regards to wages, some companies do pay better wages but those have been anemic in growth even though companies have experienced higher earnings. There is no indication that will change with this bill. If they aren’t raising wages today with higher earnings, why would they do it then?
    ...
    One way I’ve advocated for seeing wages rise is to couple the tax cuts to business with a raise in the federal minimum wage to $12 or higher. That would make sure the average American benefited. But i’l Bet you won’t get behind that.
    ...
    You are parroting the lines of Laffer advocates even though there is no proof of those ideas EVER working. All the while our deficit and debt rise. Wanna try another round?

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