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Mnuchin Dismisses SALT Workarounds, Charitable Giving Concerns

Posted on January 12, 2018 by Jonathan Curry

Efforts by high-tax states to find ways around the newly imposed $10,000 cap on the state and local tax deduction are “ridiculous,” according to Treasury Secretary Steven Mnuchin.

“I think it’s one of the more ridiculous comments to think that you can take a real estate tax that you’re required to make and dress that up as a charitable contribution,” Mnuchin told reporters at a January 11 White House press briefing.

Mnuchin’s comments come as state lawmakers, particularly from high-tax states, have explored unconventional ways to mitigate the effect that capping the deduction has on state budgets. A bill introduced in California, for example, would allow residents to make a charitable donation to a fund designated for public purposes and claim both a state tax credit and a federal deduction.

Mnuchin did not directly address whether the IRS or Treasury would take any action to halt such efforts, but he remarked that he would prefer states be “more focused on cutting their budgets and giving tax cuts to their people in their states than they are on trying to evade the law.”

The Treasury secretary also indicated that he was unconcerned that provisions in the new tax law like the nearly doubled standard deduction would reduce charitable giving. “I don’t share that concern at all, and I would say quite the opposite — that we’ve raised the limits that rich people can give to charity to encourage charitable donations,” Mnuchin said.

The Tax Cuts and Jobs Act (P.L. 115-97) increased the charitable contribution deduction’s limit from 50 percent of an individual’s income to 60 percent.

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