House Dems are set to propose significant changes in the $10,000 limit for the federal deduction for state and local taxes, after the Ways and Means Committee didn’t address the tax break in a package of proposals released Monday.
Ways and Means Chairman Richard Neal in a joint statement with Representatives Tom Suozzi of New York and Bill Pascrell of New Jersey said the tax plan was not the final step for legislation to enact the White House’s agenda and pledged to “undo” the cap - that was part of the Republican’s 2017 tax law - who had argued that the previous SALT rule acted as a blue state subsidy to enable further fiscal “maleficence” at the state and municipal level. But some party progressives, including New York Representative Alexandria Ocasio-Cortez of New York have called the SALT deduction a give-away to the rich because most of the benefits flow to high-income households. An odd sight when you see progressives and Republicans aligned on an issue.
“We are committed to enacting a law that will include meaningful SALT relief that is so essential to our middle-class communities, and we are working daily toward that goal,” the lawmakers stated.
The deduction is a tricky issue for Democrats as they try to put together a structure to pay for Biden’s plans because it would cost the Federal Government revenue to raise the limit. A group of lawmakers from high-tax states has warned they won’t support any legislation unless the SALT cap is addressed.
“I have been consistent for 6 months ‘No SALT, no deal’,” Representative Suozzi said in a statement. The proposal remains in thin balance to either narrowly pass or narrowly be dead in the water.