A bipartisan push from high-tax state lawmakers is threatening to upend the fiscal balance for Americans in low-tax states like Florida. Their goal? To lift the cap on the federal State and Local Tax (SALT) deduction, a move that would effectively force middle-class families in red states to subsidize wealthy taxpayers in places like California and New York.

Before the 2017 tax reforms, the SALT deduction allowed residents of high-tax states to offset their hefty state taxes against their federal tax bill, enjoying the same federal benefits as everyone else. This created an unfair wealth transfer, burdening workers in low-tax states who paid more in federal taxes without similar relief. Capping the SALT deduction at $10,000 leveled the playing field, exposing the true cost of blue-state tax policies and sparking migrations—Florida gained over a million residents, while California and New York each lost a million.

Now, lawmakers from both parties in high-tax states are holding President Trump’s tax cuts hostage, demanding an expanded SALT deduction as the cuts face expiration. But here’s the catch: raising the cap overwhelmingly benefits households earning over $200,000, not the middle class, who typically rely on the standard deduction. The result? Budget shortfalls that could drive higher taxes or ballooning deficits, hitting middle-class families nationwide the hardest.

This isn’t just about money—it’s about fairness and federalism. The SALT deduction undermines the competitive spirit of our Constitution, where states vie for residents by keeping taxes low and regulations light. Historically, progressives have used federal tax policy to stifle this competition, like when they targeted Florida’s estate tax repeal in the 1920s to curb its rise as a retirement haven. Today’s SALT push is a modern echo of that tactic, punishing states like Florida for their pro-growth policies.

Instead of reinstating a policy that rewards fiscal irresponsibility, Congress should consider scrapping the SALT deduction entirely. It’s not just a tax break for the rich—it’s a scheme to export blue-state tax burdens across the country, eroding the very principles that make our federal system work.

Federalism News

SALT Deduction Push Threatens to Spread Blue-State Tax Woes Nationwide