Freshmen Congresswoman Lauren Underwood, D-Naperville, and Congressman Sean Casten, D-Downers Grove, introduced legislation to increase the amount of state and local taxes that can be deducted from federal tax returns, an amendment to the GOP's Tax Cuts and Jobs Act of 2017.
Speaking in a telephone press conference Thursday, Underwood and Casten said their districts were unfairly affected by the $10,000 cap on state and local tax deductions. In Illinois, they said nearly 2 million households claim the state and local tax deduction.
Their bill, House Resolution 1757, would increase the cap to $15,000 for those filing individually and to $30,000 for couples filing jointly, to eliminate what they called the “marriage penalty.”
It would affect families earning up to $200,000 per year.
It also includes an inflation adjustment so the value of the deduction does not reduce over time, Underwood said.
“This was a top-of-mind issue,” Casten said. “For the last year, we have heard people screaming at us, ‘You have to change this tax bill.’ ”
As Illinois families file their taxes this year, many are discovering they owe thousands more than last year because they can no longer deduct all of their state and local taxes as a result of the Republican tax law, Underwood said.
"This is unacceptable," Underwood said. "Our community does not deserve to be double-taxed."
Casten said families in the five counties he represents in the 6th Congressional District – Kane, McHenry, DuPage, Lake and Cook – pay high state and local taxes and are disproportionately affected by the $10,000 deduction cap.
Underwood represents the 14th Congressional District, which includes parts of Kane, McHenry, Lake, DuPage, DeKalb, Kendall and Will counties.
Casten said the idea that state and local taxes should be deducted from what is paid to the federal government goes back to when the founders determined that people should not be double-taxed.
"With this legislation, I’m seeking to lift that burden," Casten said.
The average state and local tax deduction in the 14th Congressional District for families earning $100,000 to $200,000, was $12,450 in 2016, Undewood said.
“That hits all the communities in our counties,” Underwood said.
“Everybody benefits so we are able to invest in our local communities, invest in libraries, schools and parks,” Underwood said. “This will have a direct impact to middle class families.”
The measure will go to the House Ways and Means Committee first before it goes to the House for a vote, where Casten and Underwood said they hope to get their colleagues talking about it.
“I am cautiously optimistic in the House,” Casten said. “The question becomes, how are we going to get pressure for the Senate to take this up.”
As to why they didn’t just introduce a bill to repeal the GOP tax bill, Casten said he would like to see a repeal. The House Ways and Means Committee is working on that, but Casten said it was highly unlikely to get it done in the 116th Congress, where Democrats have a majority in the House and Republicans in the Senate.
"Our thought was if we could get this ... done this cycle and do a full repeal later,” Casten said.
“Our goal and objective is to help middle class families,” Underwood said.
The other issue is that the GOP tax bill made corporate tax cuts permanent, while state and local tax deductions were to expire in 2025, Underwood said.
“In our bill, at the end of 2025, we would revert back to the original system and allow Americans to deduct their entire local taxes,” Underwood said.
Casten said the original tax cut bill “was massively skewed toward the wealthiest 1 percent … with a massive deficit as far as the eye can see.”
“This is a surgical fix we think we can do in this session,” Casten said.