(Bloomberg) -- Residents in Manhattan and the San Francisco Bay area pay the highest state and local taxes in the country -- a key statistic in the ongoing congressional debate about whether to expand a tax break for local levies paid.
Manhattan residents averaged $18,543 in state and local taxes, or SALT, in 2018, according to analysis Wednesday from the right-leaning think tank, the Tax Foundation. Taxpayers in San Francisco Bay-area counties Marin and San Mateo paid on average $15,851 and $13,747, respectively, according to the report, which is based on Internal Revenue Service data from 2018.
The focus on state and local tax bills has intensified since a 2017 change in the tax code limited the SALT deduction to $10,000, which meant that some people in high-tax areas weren’t able to claim as big of a tax break on their federal returns as they had in past years.
Top SALT Paying Counties | Total SALT Paid | SALT Deduction Claimed |
---|---|---|
New York County, NY | $18,543.05 | $1,560.02 |
Marin County, CA | $15,851.31 | $2,804.20 |
San Mateo County, CA | $13,747.38 | $2,198.73 |
Santa Clara County, CA | $10.807.17 | $2,061.66 |
Westchester County, NY | $10,668.11 | $2,013.69 |
San Francisco County, CA | $10,130.36 | $1,527.29 |
Fairfield County, CT | $9,877.48 | $1,995.12 |
Falls Church City, VA | $8,315.89 | $2,982.84 |
Pitkin County, CO | $7,680.54 | $1,438.14 |
Morris County, NJ | $7,396.94 | $2,167.18 |
Democrats in Congress are now debating expanding the SALT deduction. A $3.5 trillion budget resolution that has been adopted in both the House and Senate calls on the two chambers to include an expansion of the SALT write-off as part of President Joe Biden’s economic agenda later this fall.
The of the SALT deduction, which allows taxpayers to exclude as much as $10,000 of the state and local tax bills from their federal taxable income, varies widely across the country. In the 10 counties with the highest SALT deduction, the average was $2,600, compared to $404 in the U.S. overall, according to the Tax Foundation analysis.
Still, only a small fraction of taxpayers can claim the tax break because it is only available to those who itemize their tax returns. About 11.4% of taxpayers itemized in 2018, and about 70% of those households had incomes of $500,000 or more, according to the analysis.
Expanding the SALT deduction has faced criticisms from Republicans, who say Democrats are creating a back-door tax cut for the rich. It’s also drawn criticism from some progressive Democrats. New York Representative Alexandria Ocasio-Cortez has said she could support a small increase to the SALT deduction, but says a broader expansion would be a “giveaway to billionaires.”
House Ways and Means Chairman Richard Neal, who leads the chamber’s tax-writing committee, said he plans to start considering the tax legislation, which will include changes to SALT, as soon as Sept. 9.
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