The severe limits in the final GOP tax bill on how much in state and local taxes Americans can deduct from their federal returns won't spark a flood of rich Big Apple residents leaving, Howard Lorber, chairman of New York City real estate powerhouse Douglas Elliman, told CNBC on Tuesday.
Opponents of the reduction in the state and local tax deduction, better known by the acronym SALT, argue that wealthier Americans who face higher tax bills will move to lower tax states.
"My own personal view is, and I think there are plenty of people in the business that share it, is that the city will not have a mass exodus," said Lorber — a decadeslong friend of President Donald Trump who before politics also made his fortune as a property developer.
"It's really hard for a real rich guy to call [Trump] up and say, 'Hey, you're going to hurt me,'" said Lorber who aimed to sum up the president's stance on the matter. "I think his overall views is, 'Some of the people complaining, really had nothing to complain about.'"
The SALT provision was contentious for House and Senate lawmakers who negotiated the compromise legislation between the two chambers.
Under current law, the SALT deduction on federal returns is unlimited. The House wanted to put a ceiling of $10,000 on property taxes alone. But the final Republican bill capped the state, local and property tax deduction at $10,000 for single filers and married couples alike.
GOP tax writers were aiming to make up for curtailing SALT by lowering overall federal tax rates and doubling the standard deduction. But those measures may not be enough of an offset for the wealthy.
Republicans attacked SALT on the belief that it gives high-tax states, such as New York and California, the ability to raise their taxes knowing the federal government will foot the bill. Critics of the SALT modification claim that bigger, higher-tax states already pay more in taxes than they get in federal funding.
No matter the argument for or against the SALT move, Lorber said everyone knew it was coming for a while. "Meanwhile the stock market is still going up with huge [real estate] sales. We've done some of the biggest sales in the city in the last month."
The House and Senate plan to vote this week on the final GOP tax bill. It's expected to pass and land on the president's desk for his signature by Christmas.