A federal tax outline unveiled Wednesday by President Donald Trump's administration calls for ending the deduction on state and local taxes, eliminating a provision used more in Maryland than anywhere else in the nation.
Forty-five percent of Maryland filers took the state and local tax deduction in 2014, the highest share in the country, according to an analysis by the Tax Policy Center. The average amount of the deduction was $12,400, according to the analysis.
In a briefing about the proposal Wednesday, Treasury Secretary Steven Mnuchin said the plan calls for eliminating all personal income tax deductions except for those granted for mortgage interest and charitable deductions. In exchange, the administration plans to lower the overall tax rate.
The plan will "make business rates competitive, bring back trillions of dollars to create jobs, simplify personal taxes, create a middle-income tax cut," Mnuchin said at the White House. "So those core principle are non-negotiable. And that's something that we all feel strongly about."
Details of the plan were vague. Administration officials said they want to reduce the number of income tax brackets to three from seven, but did not stipulate the income ranges that would fall under each of those new brackets.
The plan is also likely to face scrutiny on Capitol Hill, where conservatives may object to any tax reductions that are not offset with spending reductions and add to the deficit.
Use of the state and local tax deduction in Maryland is partly a reflection of the state's generally higher incomes and tax rates. Filers in other states — including California, New York Connecticut and New Jersey — had higher average deduction amounts. Mnuchin dismissed concerns about the deduction in an interview with the Associated Press.
"It's not the federal government's job to be subsidizing the states," he said.
Several Democrats dismissed the proposal. Maryland Sen. Chris Van Hollen described it as a "half-baked collection of ideas that add up to a huge giveaway to Donald Trump and his rich friends."