Rubbing SALT into the Wound

I'm commenting on this piece from today's NY Times, which is about how the cap on the deduction for state and local property taxes is causing problems for Republicans in the House in passing that big, beautiful, tax bill.  Here I just want to make a couple of quick observations, but a personal point first.  

Yesterday, I paid the initial installment of the Champaign County property tax.  Even though we get the senior citizen exemption, it only lowers our tax bill a trifle.  The amount of our property tax well exceeds the $10,000 federal cap.  That's mostly not a big deal for me except on specific days - when I use TurboTax to file our federal return and when I pay the property taxes. Otherwise, it is out of sight, out of mind.  But Champaign housing costs are modest and we have comfortable retirement income.

The underlying issue considered in the article is for those who live in the megalopolis in and around New York City.  This includes those who live in Nassau County, Suffolk County, Westchester County, Eastern New Jersey, and New York City itself, all of which are mentioned in the article, and perhaps those with an even longer commute to the city, such as in southern Connecticut.  The issue is about housing costs, which are sky high, and how working families even with two earners struggle to afford the expense.   For them it's very challenging, no doubt.  With that, the $10,000 cap on the deduction for state and local property taxes, which first came into effect in 2018, added insult to injury.  

So, Republican lawmakers in the area are looking for some way to remedy the situation, perhaps by raising the cap, or getting rid of it altogether.  But, this needs to be done in a revenue neutral way, where the tax revenue lost from raising the property tax cap gets offset by some revenue enhancement elsewhere in the system.  To this now retired economist, a cap on total deductions makes sense whether those deductions are for mortgage interest, property taxes, charitable contributions, healthcare costs, or other categories of expense that are eligible for tax deduction.  

But, here's the thing.  An overall cap on deductions would impact the highest income taxpayers most.  No doubt charities would be upset by such a change in the law, as they'd lose some of the largesse that high-roller contributors had been making.  But the real ones complaining might be those Republican lawmakers, who lose out on gifts from these same high rollers, just because they made the actual tax law more progressive.  

In my opinion, that's how the tax system should be.   It's quite ironic that the cap on this single tax deduction has become such an issue in the New York megalopolis that it might expose the regressive nature of this big, beautiful, tax bill.  If I didn't find some dark humor in that, surely I'd be crying about it.