A key Democratic lawmaker said a detailed, final agreement to restore the federal deduction for state and local taxes could be reached this week, with another advocate flagging a temporary repeal of the break’s limit as the likely proposal.
The SALT deduction is one of the final tax details to be worked out in the House version of an up-to-$3.5-trillion tax and social spending bill. The House Ways and Means Committee, the panel responsible for writing the tax portion of the bill, failed to reach agreement about how to address SALT earlier this month.
“This is all going to come to a head this week,” Representative Tom Suozzi of New York told reporters on a conference call Monday. “I think it’s sooner than we all expected.”
Later in the day, New Jersey Representative Bill Pascrell said a two-year repeal of the $10,000 cap would “probably” be the agreed-on solution for SALT.
The SALT deduction changes are likely to be added by the House Rules Committee, just before the bill goes to the House floor for a vote. That panel could consider the legislation as soon as Tuesday, though a meeting had not yet been scheduled by late Monday.
Raising or repealing the $10,000 limit on the SALT deduction, a change imposed by the 2017 Republican tax overhaul, is one of the most politically charged aspects of the negotiation.
Blocking threat
Suozzi, known as “Mr. SALT” for his dedication to the issue, said there are enough Democrats who will block the entire bill if the measure is not addressed.
The tax break is particularly valuable in high-tax states, which also happen to be Democratic strongholds, including New York, California and New Jersey. Democrats have been considering repealing the cap for two years, making the tax break unlimited during that time — a cheaper option than a permanent repeal.
Some progressives, including Representative Alexandria Ocasio-Cortez of New York, have criticized that idea, saying it would be too big of a benefit to the wealthy and that the cap should be increased, but not repealed entirely.
“I’m focused like a laser on this issue and I’ve really put myself way out there,” said Suozzi, whose district is on Long Island and is advocating for full repeal. “If it doesn’t happen, I’m going to look like an idiot.”
The Senate is working on its own version of the sweeping social spending package to address education, climate and childcare issues that would be funded by tax increases. Senator Bob Menendez, a New Jersey Democrat, has said he will block the bill in that chamber if the SALT write-off is not included.
