Trump’s Policy Pivot: SALT and Credit Cards
September 24, 2024
While the race for the White House remains tight, Vice President Kamala Harris’s recent polling has her pulling ahead of former President Donald Trump in several key swing states. Meanwhile, Trump has announced sharp policy changes on state and local tax (SALT) deductions and rate caps on credit cards.
Why it matters: Bold campaign promises don’t always translate into governing priorities, but Trump’s reversal could put him at odds with different GOP factions. When it comes to tax policy, the reversal would also complicate the GOP plans to swiftly reauthorize the Tax Cuts and Jobs Act (TCJA).
SALT Flip: The SALT deduction is drawing particular scrutiny.
- Trump’s signature 2017 TCJA first placed the $10,000 limit on the federal deduction for state taxes, and the limitation has been criticized by blue-state Republicans and moderate Democrats alike.
- While raising the SALT cap is likely to happen ahead of its 2026 expiration, eliminating it while extending the rest of TCJA would have a budgetary cost of over $1 trillion, according to Penn Wharton’s Budget Model.
- Senate Majority Leader Chuck Schumer (D-NY), who has opposed the cap since its inception, supports the change but criticized Trump for “selective amnesia” on the issue.
- Meanwhile, Senate GOP Whip John Thune (R-SD) criticized the idea of eliminating the cap and noted that it was used as a “pay for” to offset other tax cuts.
Credit Card Interest Cap: At a campaign rally last week, Trump also floated a promise to temporarily cap interest rates on credit cards at 10%. While certain states cap interest rates, others do not, and federal law enables certain national bank card issuers to charge rates in excess of any state usury cap.
- Trump’s 10% cap would be even more aggressive than a 15% cap proposed by Rep. Alexandria Ocasio-Cortez (D-NY) and Sen. Bernie Sanders (I-VT). Republican Sen. Josh Hawley (R-MO) has proposed an 18% cap.
- Industry groups, including the American Bankers Association and the Consumer Bankers Association, opposed the cap.
- The cap would require legislation, which is unlikely to pass in a closely divided Congress.
Please contact David McCarthy (dmccarthy@crefc.org) with questions.