Main Street vs. Beltway: The GOP’s Tax Reform Crossroads and What It Means for Louisiana

As Congress debates the future of Trump-era tax policy, a quiet but dangerous provision has made its way into the conversation: an expansion of the State and Local Tax (SALT) deduction cap. While billed as a fix for middle-class families, this change would actually punish small business owners in low-tax states like Louisiana—many of whom benefited from the 2017 Tax Cuts and Jobs Act (TCJA) through targeted relief for pass-through entities.

Under the original TCJA, small businesses operating as S-corporations, partnerships, and sole proprietorships were granted a 20% deduction on qualified income—a powerful incentive for entrepreneurs and a much-needed boost to Main Street. At the same time, the law capped the SALT deduction at $10,000, reining in a loophole that overwhelmingly benefited high earners in places like California and New York. This cap helped make room for lower rates across the board.

Now, some Republicans in Congress are pushing to raise that SALT cap to $40,000 for households making up to $500,000. On paper, it might look like a win for the upper-middle class. In practice, it’s a windfall for wealthy coastal earners and a loss for small business owners in fiscally responsible states like Louisiana. That’s because this change comes at a cost: to offset the revenue loss, the new tax plan quietly eliminates or restricts other pro-growth provisions—especially those that helped small businesses thrive under the original law.

In short, Washington is proposing to raise taxes on Louisiana’s entrepreneurs so New York lawyers and California financiers can write off more of their state income taxes. This is not tax reform—it’s regional redistribution dressed up as populism.

Louisiana small business owners are already facing a tough economic climate. Inflation remains sticky, insurance rates are rising, and labor remains tight. The last thing they need is a backdoor tax hike from Washington that strips away one of the few remaining protections they had under the TCJA. While some Republicans claim this SALT expansion helps the middle class, the truth is it undermines the very coalition that made the 2017 reforms possible: the small business owners who create jobs, invest in communities, and keep local economies running.

If Congress wants to help Main Street, they should protect the parts of the tax code that actually serve Main Street—not trade them away to curry favor with high-tax states and deep-pocketed donors. Louisiana can’t afford to subsidize California’s tax structure. It’s time to say no to this change and yes to preserving a tax code that works for small business.