New York Democrat Tom Suozzi speaks about the State and Local Taxes (SALT) caucus during a press conference outside the U.S. Capitol in Washington, DC, on Thursday, April 15, 2021.
Sarah Silbiger | Bloomberg | Getty Images
A group of members of the House of Representatives exerted more pressure Thursday to lift the state and local tax deduction cap as politics emerges as a potential stumbling block in efforts to get President Joe Biden’s infrastructure plan passed.
Legislators from both parties announced the SALT caucus, designed to remove the $ 10,000 limit on state and local deductions set under the 2017 Republican Tax Act. The approximately 30 members of the House in the group mostly represent the high-tax countries of New York, New Jersey and California.
Members of Congress from these states have been pushing for the tax deduction cap to be lifted since the GOP passed it. The formation of the caucus shows that policy repeal has grown in importance, even as lawmakers on both parties oppose the change, wondering whether it will do the most to help wealthy taxpayers.
A handful of lawmakers have tied the drive to lift the limit to the Democrats’ next legislative priority: an infrastructure and jobs package worth more than $ 2 trillion. New Jersey Democrats Josh Gottheimer and New York’s Tom Suozzi – co-chairs of the new group – and New Jersey’s Bill Pascrell have stated that they “will not accept changes in tax law that do not restore the SALT deduction.” “”
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With the Democrats having a slim majority of 218 to 212 in the House, their possible rejection of an infrastructure bill would jeopardize its passage. It is now unclear how many members of the SALT caucus would make lifting the cap a condition of supporting an infrastructure plan.
“You’ve heard a lot about SALT in terms of infrastructure bills,” Suozzi said Thursday, “but not all of them are in the same place” when they put it into legislation.
Others, including Senate Majority Leader Chuck Schumer, whose New York state is one of the most heavily supported by the abolition of the cap, have attempted to lift the limit. However, doing this as part of the infrastructure bill would cause problems for the party.
Biden has called for the corporate tax rate to be raised to 28% and preventing corporate profits from being offshored to offset infrastructure spending. The lifting of the SALT cap would cost the federal government money and leave Congress with another funding gap.
White House press secretary Jen Psaki asked Wednesday if she wanted to lift the limit and said the government wanted to hear more ideas about how to pay for the infrastructure package.
Many progressive Democrats and Republicans have criticized efforts to lift the SALT limit. Almost all of the tax cut from abolishing the cap – 96% – would go to the top 20% of American households, the Tax Policy Center estimated in 2018.
According to the analysis, more than half of the benefits would go to the top 1% of households.
Proponents of Thursday’s cap lifting denied the notion that it would help wealthier Americans the most.
“That affects middle-class families in my district,” said Gottheimer.
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