As the Tax Cuts and Jobs Act (TCJA) provisions approach their 2025 expiration date, policymakers face a significant fiscal challenge: extending these tax cuts would add approximately $4.5 trillion to the federal deficit over the next decade. Finding responsible offsets to minimize this massive deficit impact has become a critical policy priority. One promising approach is capping the state and local tax (SALT) deduction for businesses — known as Business SALT.
Arnold Ventures’ Recommendation:
Apply the existing $10,000SALT cap to businesses to help level the playing field across business types, reduce distortions in the tax code, and raise over $430 billion in revenue over 10 years.
This policy recommendation would:
Generate Significant Revenue of approximately $100 billion over 10 years that could help reduce the $4.5 trillion deficit impact of extending the TCJA
Eliminate the Incentive for business owners to convert to C corporation status purely for tax avoidance purposes, which has increased since the implementation of the individual SALT cap in 2017
Level the Playing Field between businesses and individuals by eliminating the inequity where individuals face a $10,000 cap while businesses enjoy unlimited deductions
