Durbin: GOP Tax Plan Leaves Illinois Middle Income Families Behind

CRYSTAL LAKE – U.S. Senator Dick Durbin (D-IL) today joined local stakeholders to discuss how the House Republicans’ new tax plan would hit Illinois families especially hard, while mostly benefitting corporations and the wealthy. The House Republican proposal reduces the top corporate tax rate while gutting the state and local tax (SALT) deduction – a move that could increase taxes on nearly one-third of all taxpayers in Illinois. The SALT deduction is used by 44 million people nationwide, including nearly two million Illinoisans, to avoid being taxed twice on their income – once at the state level and again at the federal level.

“If Republicans want to get serious about fixing our tax code, it’s time they stopped clinging to the same failed policies that have been proven time and again to hurt middle income families and help the wealthy few,” Durbin said. "Eliminating or gutting state and local tax deductions will hit Illinois hard—resulting in double taxation for a third of the families in our state. I hope my Republican colleagues will abandon this backwards approach and join a bipartisan effort to provide hard working families across the country the relief they desperately need.” 

After first proposing to eliminate the SALT deduction completely, the House Republican tax plan would now gut it by eliminating the deduction for income and sales tax while retaining the deduction for property taxes up to $10,000. The plan would also eliminate key deductions for medical expenses and student loan interest that middle-class families rely on.  Currently, unexpected medical expenses such as hospital care and long-term nursing home care can be deducted if they exceed 10 percent of an individual's income and taxpayers can also claim up to $2,500 for student loan interest.

Under the House Republican proposal, 51 percent of taxpayers in Illinois’ 6thCongressional District--the 12th highest percentage among districts nationwide--would see their taxes increase because they would not be allowed to claim the average SALT deduction of $10,189. Seventy-nine percent of these taxpayers earned less than $200,000 in 2015. In Illinois’ 14th Congressional District, 50 percent of taxpayers would see their taxes increase – 86 percent of which earned less than $200,000 in 2015. 

If the SALT deduction is entirely eliminated, a family of four living in Crystal Lake making about 76,000 annually would pay about $1,400 more in taxes each year.

Illinois has the fifth highest number of taxpayers who claim the state and local tax deductions.  Nearly two million Illinois taxpayers claimed more than $24 billion in SALT deductions in 2015, each claiming an average $12,500 in deductions.  Of Illinoisans who claim SALT, around 85 percent of them earn less than $200,000 per year. The repeal of the state and local tax deduction would raise $1.3 trillion over 10 years, which the Republicans use to pay for tax cuts to the wealthiest families and corporations.