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Attorney General William Tong

11/26/2019

ATTORNEY GENERAL TONG, GOVERNOR LAMONT ANNOUNCE APPEAL OF SALT TAX DECISION

SALT Deduction Cap Costing Connecticut Taxpayers $2.8 Billion Annually

(Hartford, CT) -- Attorney General William Tong and Governor Ned Lamont announced today that Connecticut has joined a multi-state effort to appeal a U.S. District Court decision that upheld the imposition of a new statutory cap on State and Local Tax (SALT) deductions. Joining a coalition of four states led by New York, Connecticut is challenging this cap because it will interfere with states’ autonomy to make their own tax decisions, will disproportionately harm taxpayers, and was enacted to target Connecticut and similarly situated states. The appeal was filed in the U.S. Court of Appeals for the Second Circuit.

"The SALT deduction cap is a politically motivated tax hike that will cost Connecticut taxpayers $2.8 billion each year. We are aggressively pursuing this appeal and will continue to fight to protect our taxpayers from Trump's discriminatory and abusive money grab," said Attorney General William Tong.

"President Trump and Congressional Republicans raised taxes for millions of middle-class Americans – intentionally targeting people who live in states such as Connecticut – while at the same time cutting taxes for corporations and the rich. Federal tax laws should not be written based on who lives in 'blue' states and who lives in 'red' states. Working as a coalition, we will fight to fully restore the SALT deduction and stop this politically-motivated attack," said Governor Ned Lamont.

The 2017 federal tax law drastically reduced the SALT deduction by capping it at $10,000. An analysis by the Connecticut Department of Revenue Services found that the cap increased Connecticut federal taxes by $2.8 billion in 2018 alone.

Throughout the United States’ history, no federal tax law has violated the sovereign interests of states by capping the federal income tax deduction for SALT at such a low amount. In fact, in America’s 243 years of existence, the U.S. government has always provided a deduction for all or a significant portion of state and local taxes.

As argued in the original suit — filed in July 2018 in the Southern District of New York — the cap is expected to depress home prices and reduce spending and business sales, resulting in slower growth for the Connecticut economy and fewer jobs across the state.

Connecticut joins the States of New York, Maryland, and New Jersey in filing today’s appeal.

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