Supreme Court Rejects Appeal Over SALT Deduction Cap

The Supreme Court declined to hear an appeal from four states that would have repealed the State and Local Tax (SALT) deduction cap, which was put in place by the Tax Cuts and Jobs Act of 2017. The cap blocks taxpayers from deducting more than $10,000 per year in their state and local taxes when itemizing federal deductions. The court’s denial was tucked into a 17-page Monday order list and did not include any reasoning from the justices.

The order denied a request from New York, Connecticut, Maryland, and New Jersey to review an October ruling from the U.S. Court of Appeals for the Second Circuit, which deemed that the SALT cap was within Congress’s broad authority over tax policy to impose the so-called SALT deduction cap and was in line with other laws which have different effects from place to place.

Get the facts

• States with high state and property taxes argued that the SALT limitation infringed on their State’s sovereignty of creating tax policy as they see fit.
• The limit on the SALT deduction was one of the most significant revenue-raising provisions of the 2017 Tax Cuts and Jobs Act.
• The Joint Committee on Taxation, Congress’s nonpartisan scorekeeper on tax matters, estimated that the cap and related provisions would raise close to $700 billion in revenue over the cap’s effective term.

Why is this important?

Nearly half the states with a state income tax offer SALT cap workarounds for the write-off limit for certain businesses such as partnerships, S-corporations, and some LLCs, allowing owners to bypass the limit for part of their state taxes through their businesses. Several other states have pending legislation.

One particular workaround is the Pass-through Entity Tax (PTET). PTET is an optional tax that allows eligible businesses to shift the payment of state income taxes to the business. Those income taxes can then be fully deducted for federal tax purposes by the business.

At present, state policymakers will be left to their own legislative fixes to provide taxpayers with relief from a $10,000 cap on state and local tax deductions. However, this ruling may revive some discussion about if and how the deduction cap should be changed moving forward, whether as a standalone issue or in the context of revised build-back better initiatives.

Read more on Worldwide ERC.

Global Economic Snapshot

• China’s benchmark share index posted its biggest one-day tumble since February 2020, after Beijing’s biggest district began mass testing for Covid-19 because of a rise in infections in the capital. — The Guardian

• Economists say that the migration from expensive coastal cities into cheaper housing markets is poised to continue as home prices set new highs and rising mortgage-interest rates increase borrowing costs for home buyers. The average 30-year mortgage rate jumped from 3.1% at the end of 2021 to 5.0% by mid-April, adding hundreds of dollars to the typical monthly mortgage payment. — The Wall Street Journal

• Managers who have increasingly relied on labor arbitrage or distant global sourcing strategies will have to develop regional alternatives. This likely will mean more balancing of production capacity and consumption within geographic trade blocs. Such blocs can largely be drawn to encompass a breadth of capabilities and resources — for example, a North American bloc that includes the U.S., Canada, Mexico, and parts of Central America that can together offer large markets, skilled as well as low-cost labor, and relatively lower transport distances and costs. Similarly, one can envision a European bloc that draws on Eastern Europe and North Africa for low-cost labor. — Harvard Business Review

• An international carbon price floor differentiated by country income levels would provide a way to coordinate national efforts to reduce the risks of catastrophic climate events. Equally important is the need to secure equitable worldwide access to the full complement of COVID-19 tools to contain the virus, and address other global health priorities. Multilateral cooperation remains essential to advance these goals. — International Monetary Fund Blog

Destination Highlight: Dallas Fort Worth International Airport

For almost 50 years, DFW Airport has been a crucial economic growth and development source. Serving one of the most dynamic regions of the economy, the airport provides air travel and cargo infrastructure essential to businesses and individuals in the region and beyond.

DFW Airport has been the catalyst for the emergence of the Metroplex area as a major urban center. In addition, the airport serves as a substantial source of business activity through operations of the airport itself and related businesses such as concessions and retail establishments within the terminals. Several offices and industrial parks surrounding the terminal areas provide an ideal location for businesses dependent on proximity to air passenger and cargo service, further increasing the economic benefits.

Get the facts:

• The airport contributes around $37 billion a year to the local economy.
• DFW Airport covers almost 27 square miles and has its zip code (75261) and city designation ("DFW Airport, TX"), as well as its police, fire protection, and emergency medical services.
• DFW is home to 24 Fortune 500 company headquarters, including American Airlines, Southwest Airlines, Kimberly-Clark, and Toyota Motor North America.
  

Why is this important?

The tremendous drawing power of the airport continues to attract businesses, individuals, and families to relocate to the DFW area. Since the pandemic and the rise in remote work, an increased number of workers are relocating to the area to be close to, or work at, a physical office location and close to the DFW Airport. As more employees can exercise remote/hybrid work options, they can work from any location. Working near such a strategically located airport is ideal and offers the flexibility of working from anywhere. In fact, according to a recent survey, DFW Area ranks number one for remote workers, partly due to DFW Airport. Living near an airport that offers numerous flights and times may also give job seekers a competitive edge.

Read the full article at Worldwide ERC.

How Remote Work Helped Tech Companies Outside Silicon Valley Grow

Some companies that hired remote workers during the pandemic say going back to the office isn’t an option. Remote work made more normal by the pandemic has altered how companies operate, especially when it comes to hiring. Tech companies outside Silicon Valley have grown because their talent pool has expanded.

Remote work has been crucial to unlocking rapid growth for some start-ups outside Silicon Valley and other major metropolitan tech hubs. Companies can recruit talent from anywhere without asking candidates to relocate.

Why is this important?

But even as remote work has broadened the pool from which start-ups outside Silicon Valley can recruit, it hasn’t necessarily made hiring easier. That’s because it works both ways: Just as a start-up in Chattanooga can hire a software engineer in San Francisco, deep-pocketed start-ups and big tech companies in San Francisco can hire software engineers who live in Chattanooga.

Hiring remote workers during pandemic lockdowns has also made it more difficult for companies to require a return to the office. Those that require office hours would have to return to a more limited local talent pool — but one that is now more competitive than it was before the pandemic.

Read more in The New York Times

The Roundup

• Robo advisers target young adults interested in ESG investing. Read more on CATO in The Wall Street Journal.
• 5 factors every successful diversity, equity, and inclusion policy should have. Read more on CNBC.
• An immigration blueprint for businesses to hire skilled professional Ukrainian refugees. Read more on Above the Law.
• With remote work, some growing tech companies see local workforces shrink. Read more Sacramento Biz Journal.
• Oyster, a remote workforce management platform, hits a $1 billion unicorn valuation. Read more in Fortune.
• A new program invites remote workers to make a home at Purdue University. Read more on Purdue University’s website.
  
  

On Tap

• Spring Virtual Conference, May 17-19, 2022. Our team is excited to bring sessions to the Worldwide ERC Spring Virtual Conference, where we focus on bending and not breaking during these tough times. We asked what is keeping you up at night, and, overwhelmingly, you responded. Your concerns are our concerns. Join your colleagues and industry leaders to discuss, and solve these issues.  Click here to register.
• Registration Open for 2022 CRP® exam; the deadline is April 29, 2022. The deadline to apply to sit for the CRP is April 29, 2022. This will be the ONLY opportunity to sit for the CRP exam this year. The Worldwide ERC Certified Relocation Professional (CRP) designation is the only credential dedicated to identifying professionals that demonstrate a broad understanding of managing employee mobility within the United States. Learn more on Worldwide ERC.
• Worldwide ERC Member-Only LinkedIn Groups: Benchmark with the best in the industry with two new member-only LinkedIn groups, Worldwide ERC GMMG and Corporate/HR Benchmarking Member-Only Forum. These discussions are exclusively for corporate and government Worldwide ERC members who have no commercial interest in relocation. This is your private, member-only community to exchange questions, answers, and ideas with other corporate and government relocation professionals! Click here to join the Global Mobility Management Group or the Corporate/HR Benchmarking Member-Only Forum.
• Worldwide ERC Member-Only Open Forum: This is a large public forum for open conversation, industry announcements, and sharing. Click here to join the open forum.
  
  • Job Posting: International Customer Service Counselor with Sterling Lexicon

The Breakroom

For months, homebuyers have had to deal with record-high asking and final sales prices. And in recent weeks, a record rise in mortgage rates has made the cost of buying a home even more expensive. But that isn’t even the end of it, as a new report found that closing costs—additional fees due at the end of any real estate transaction—have also jumped this year.

Closing costs are increasing across the country: The report, released last week by CoreLogic’s ClosingCorp, found that closing costs rose 13.4% in 2021. The increase has pushed the average extra fees for a single-family home to nearly $7,000. Closing costs generally include expenses related to paying off lenders’ fees and underwriting mortgage loans. Other common closing costs include taxes, real estate commissions, and title insurance payments.

Closing costs are more expensive for homebuyers in certain locations, such as New York, Delaware, and Maryland, where average closing fees are all above $14,000. Can you guess the US city with the highest closing costs?

• Hint 1 Its famous library is the world’s largest and has more than 170 million objects in the collection.
• Hint 2 It was gifted 3,000 cherry trees by Mayor Yukio Ozaki of Tokyo in 1912.
• Hint 3 All lettered streets in this city occur in alphabetical order—except for J, because there is no J Street. The most likely explanation is that people thought it would be confused with I Street since the two letters were frequently used interchangeably during the 18th century.

Washington, D.C., is by far the most expensive market for closing costs, at an average of nearly $30,000.