Welfare for the Wealthy at Your Expense

Right now, President Trump’s massive tax bill is stuck in Congress. The holdup? A fight over a tax break that mostly helps wealthy people in blue states. It’s called the SALT deduction. And it shows how special interests can hijack conservative priorities.

Trump’s “One Big Beautiful Bill” was supposed to extend his 2017 tax cuts and boost the economy. But a small group of Republicans from high-tax states are holding the whole thing hostage. They want to quadruple a tax break from $10,000 to $40,000. The House already caved and passed it. Now the Senate has to decide.

This fight matters because it shows what’s wrong with our tax system. And it puts conservative principles on trial.

What Is This SALT Thing Anyway?

SALT stands for State and Local Tax deduction. It lets people who itemize their taxes deduct what they pay in state and local taxes from their federal tax bill. Before 2017, there was no limit. Rich people in places like New York and California could deduct tens of thousands of dollars.

In 2017, President Trump capped it at $10,000. That upset a lot of wealthy people in blue states. Now, those same people are using their political muscle to get that cap raised to $40,000 or more.

SALT deductions are nothing but welfare for high-income deep blue urbanites to keep them from feeling the economic pinch of the policies they force onto others.

it’s subsidy for profligacy.

this has no place in the federal tax code.#SALTfreeBudget https://t.co/w8ZiFuzrmc

— el gato malo (@boriquagato) June 5, 2025

The Hostage Crisis on Capitol Hill

Here’s what makes this story so important right now. A group of five Republicans calling themselves the “most salty five” held up Trump’s entire tax package until they got their way.

The five are Reps. Nick LaLota, Andrew Garbarino, and Mike Lawler from New York, plus Tom Kean from New Jersey and Young Kim from California. They said they wouldn’t vote for the bill unless the SALT cap got raised to $40,000.

Speaker Mike Johnson and other GOP leaders caved. They started at $30,000. But that wasn’t enough. The rebels pushed it to $40,000. The House passed it by just one vote – 215 to 214.

Now the Senate has to decide. Do they keep this welfare for the wealthy? Or do they put conservative principles first?

But here’s the kicker. If Republicans don’t pass something, all of Trump’s 2017 tax cuts expire at the end of 2025. That means higher taxes for everyone. The SALT rebels know this. They’re using it as leverage.

How It Works

Say your neighbor in New York makes $500,000 a year. They pay $50,000 in state and local taxes. Before 2017, they could deduct all $50,000 from their federal taxes. That means you and I were essentially paying part of their state tax bill through lower federal revenue.

The numbers are stark. Before the cap, 91 percent of SALT benefits went to people making over $100,000. The average deduction was around $13,000. But in six states – California, New York, New Jersey, Illinois, Texas, and Pennsylvania – people were deducting much more.

This is the opposite of conservative principles. We believe in limited government and low taxes. We don’t believe in using the federal tax code to reward big-spending states.

The Rich Get Richer

The current fight shows exactly who benefits from SALT. Almost all people making more than $200,000 claim this deduction. That’s fewer than 15 percent of American households.

For regular working families making under $50,000, only 2.3 percent even itemize deductions. The standard deduction is better for them. But for the wealthy, SALT is like a government gift.

How SALT Rewards Bad Policy

SALT encourages wasteful government spending. High-tax states like California and New York can raise taxes on their residents because those residents know they can write off some of those taxes on their federal returns.

This makes it easier for those states to fund big government programs. The federal tax code shouldn’t reward states for overtaxing their citizens.

Why should someone get a bigger federal tax break just because they chose to live in a high-tax state? That’s not fair to taxpayers anywhere else.

The Math Problem

The current tax bill faces a big math problem. Republicans want to extend Trump’s tax cuts. But they also want to raise the SALT cap. The total cost could top $4 trillion over ten years.

Something has to give. We can either have broad tax relief for all Americans or we can give special breaks to wealthy people in high-tax states. We can’t do both without exploding the deficit.

Conservative budget hawks are already pushing back. They know that fiscal responsibility matters more than political horse-trading.

What Happens Next

The Senate is now debating Trump’s bill. They have until July 4th to pass something. Budget hawks like Senator Rand Paul are already pushing back on the SALT increase.

The Senate has no Republicans from deep blue states. So there’s less pressure to cave to the SALT lobby. But if they cut the SALT increase too much, the House rebels might sink the whole bill.

Trump himself flip-flopped on this issue. In 2017, he signed the $10,000 cap. But during the 2024 campaign, he promised to “get SALT back” at a rally in New York. Now he’s stuck between his promise and fiscal reality.

Real tax fairness means everyone plays by the same rules.

This article was written with the assistance of AI. Please verify information and consult additional sources as needed.