It was reported yesterday evening that congressional Republicans negotiating changes to their tax cut bill in conference had reached an agreement to restore state and local income tax deductions, but it appears that may not be the case, at least not directly.
According to the Washington Post, Republicans intend to cut top marginal rates to make up for the loss of state and local tax deductions.
Senior Republican negotiators were close to reaching a deal Tuesday to reduce the tax rate for high-income households from 39.6 percent to 37 percent, blowing past political concerns about aiding the rich in order to ease passage of a $1.5 trillion tax package.
The move, which would still need to gain the support of enough Republican lawmakers in both the House and Senate, follows complaints from wealthy taxpayers in New York and elsewhere that their taxes could go up under the legislation because of other changes it makes to the code
This will obviously place even more downward pressure on the middle class because a significant number of people who will lose their state and local deductions do not pay the top marginal rate of 39 percent. Giving rich families making more than $1 million per year another tax cut isn't going to make it better.
It's possible the conflicting reports on top marginal rates and restoring SALT deductions are not actually conflicting at all and they intend to do both, but that doesn't seem mathematically possible if they want to stay under the $1.5 trillion deficit threshold.