After the passage of the GOP’s “Tax Cuts and Jobs Act” in December 2017, President Donald Trump boasted to a group of wealthy supporters at his Mar-a-Lago club that “You all just got a lot richer.”
And there can be no doubt that Trump had given a stupendous gift to the mega wealthy. The tax law, which slashed individual, inheritance, and corporate taxes, funneled 83 percent of its benefits to the top 1 percent of earners, and triggered such a huge explosion of stock buybacks that even some Republicans think it should be reined in.
But not every wealthy person is celebrating. In fact, according to Politico, the New York City real estate market is reeling from the tax law, triggering a decline in home prices, an exodus from the city, and even fears of a recession:
Under the new law, individuals can no longer deduct more than $10,000 in state and local taxes from their federal returns. The law also slashed the mortgage interest deduction from $1 million to $750,000.Trump himself has gotten an earful from wealthy New York friends complaining about the impact of the changes on the high-end real estate market. “There are some people from New York who have been speaking to me about doing something about that, about changing things,” the president said at the White House last month. “I’d be open to talking about it.”
Politico notes that Republicans on Capitol Hill, for their part, have no interest in revisiting these provisions of the tax law.
More broadly, these provisions have been especially hard on Republicans in states where taxes are higher, and thus people stood to lose more from cuts to these deductions. Last year, the GOP lost key House races in places like California, New Jersey, and northern Virginia, where millions of affluent suburban voters claim the SALT deduction.
The irony is that, although the tax bill broadly was a massive gift to the wealthy and unpopular for it, the provisions limiting the deductibility of real-estate expenses are among the only part of the tax law that actually stand to increase taxes on wealthy people. And it is these provisions that have proven to be the biggest headache for Republicans.