As the fight continues on Capitol Hill over how to pay for President Joe Biden's economic and infrastructure plans, property taxes are getting a lot of attention.
In one case, it's the real and continuing battle by some lawmakers to repeal or at least revise the itemized deduction limit on state and local taxes, including income and real estate levies collected at those governmental levels.
In the other, it's a false claim about a new, nationwide real estate tax.
SALT deduction change: First, a look at the real taxes, the state and local taxes, or SALT, collected by almost every state or county (or parish) to fund their operations.
The Tax Cuts and Jobs Act (TCJA), the Republican-written tax reform bill passed in late 2017, limited itemized claims of these taxes to $10,000. That amount takes into account both income and real estate taxes that previously were fully deductible on Form 1040 Schedule A.
The change was made in part to cover the increased standard deduction amounts. Political cynics also say it was done so that the GOP could whack taxpayers in primarily Democratic and high-tax states like California, New York, and New Jersey.
The limit, like other individual tax provisions in the TCJA, it's set to expire at the end of 2025. But both Republican and Democratic lawmakers in high-tax states, along with some representing areas elsewhere across the country with higher-than-average income and property taxes, have been working to repeal or revise the SALT cap before then.
Fighting to change the SALT changes: Early on in the discussion of the Biden White House economic plans, such change looked doable. Now, not so much.
Democrats now are fighting amongst themselves, as well as with Republicans over how big President Joe Biden's economic plan should be and how to pay for however much it ultimately is.
Since Biden has agreed to reduce the cost from $3.5 trillion to somewhere between $1.9 trillion to $2.2 trillion, that's forcing second looks at some costly proposals, like the SALT cap change, that made the first cut.
Members of Congress supporting the SALT changes are trying to salvage some way to ease, if not repeal, the law.
False new property tax claim: Meanwhile, there's another property tax matter that's cropped up in the other major Biden Administration proposal, the infrastructure plan.
The problem with this tax is that it's a fake one, but it's gotten social media attention.
Over the weekend, a post appeared on Facebook warning that the plan to fix roads, bridges, and much more contained a 3 percent federal tax on all personal and commercial real estate.
The claim eventually was tagged by Facebook as a false one, but it made it across the internet enough so that the fact checkers at the Poynter Institute's PolitiFact took notice.
The PolitiFact verdict? Pants on Fire!
"President Joe Biden's Build Back Better agenda features an array of policies that would touch on everything from climate change to healthcare," notes the PolitiFact website. "One thing it wouldn’t do is establish a universal federal property tax."
Tax experts explain: The false ruling was issued after PolitiFact got the assessments of multiple tax experts who had reviewed both Biden's Infrastructure Investment and Jobs Act and the Build Back Better Act.
Their take was unanimous. Biden's infrastructure agenda doesn't contain a 3 percent property tax, or any federal property tax at all.
The facts undoing the Facebook claim include a wrong page citation for the legislation, as well as pesky U.S. Constitution language that makes a federal property tax nigh impossible.
Plus, notes PolitiFact, the same wrong national property tax info was circulated last year before the 2020 election. Such rehashing is a common trait of fake claims on just about every topic, as well as scams, tax and otherwise.
So if you see anything about a 3 percent federal property tax on social media, don't worry about it. It's not happening. But do report it as a false claim to the site's administrators.
And if you're a taxpayer hoping that you might soon be able to claim more than $10,000 in state and local income or property taxes as a federal tax deduction, stay tuned. That possibility is real, though not guaranteed.
You also might find these items of interest:
- Where your state ranks when it comes to property taxes
- New tax law prompts moves from high- to lower-tax states
- New Jersey residents projected to pay the most state taxes over their lifetimes