EDITORIAL: Democrats embrace write-off that favors high earners

Tax day is nearly upon us, reigniting the debate over President Donald Trump’s tax cuts, passed in 2017 and extended last year. In a front-page story last week, the Wall Street Journal reported that last year’s legislation is “delivering bigger refunds and smaller tax bills to high-income Democratic-leaning regions that didn’t vote” for Mr. Trump.

The implication is that the Republican tax reform was intended as a sop to the rich and designed to favor only the president’s supporters. In fact, a Tax Foundation analysis found that the tax legislation “will reduce federal taxes on average for individual taxpayers in every state.” Meanwhile, the Treasury Department reported in March that nearly 45 percent of filed returns claimed at least one of the new tax cuts, which include certain exemptions for overtime and tip income and an enhanced standard deduction for seniors.

Democrats who insist that the GOP bill was a gift to the rich are arguing against themselves. As the Journal notes, the primary reason many wealthy blue state residents will benefit is a provision in the tax bill that quadruples how much in state and local levies an individual wage earner may write-off on his or her federal return. Known as the SALT deduction, this loophole helps big-spending politicians in progressive states minimize the pain of their profligate spending.

Prior to 2017, there was no cap on the deduction, a massive benefit for the wealthy in high-tax states such as New York and California. Mr. Trump’s first-term tax bill limited the benefit to $10,000. Democrats were unhappy, worried that residents in deep blue jurisdictions might revolt if they were forced to bear the full brunt of the heavy state and local tax burden. “Trump’s SALT cap made their high taxes transparent to everyone — and politically costly,” Mario Loyola of the Heritage Foundation noted in 2025.

Democrats last year found allies among GOP House members from red districts in progressive states. In order to generate enough Republican votes to pass the 2025 extension, the SALT cap was increased as part of a compromise.

The Journal reports that the higher SALT write-off “is expected to save taxpayers $29 billion as they file returns this year.” That’s “about as much as the overtime and tips deduction combined.” The Committee for a Responsible Federal Budget estimates that the reform will “almost exclusively benefit high earners.”

So while Democrats repeat their eat-the-rich rhetoric to gain political points on tax policy, they have fought for years to preserve a tax loophole that overwhelmingly helps rich wage earners in blue states. Cynicism and politics can be a toxic combination.