House Democrats are making a last-ditch bid to reverse the $10,000 cap on state and local tax deductions before year’s end. But they’ll likely need to renew their efforts in 2020 -- or beyond -- because the legislation has no chance of becoming law this year.
Democrats in Congress, governor’s mansions and state legislatures have tried a slew of tactics to repeal the $10,000 SALT cap or find ways around it. Their attempts been stymied by courts, the Treasury Department and Republicans on Capitol Hill.
This time, Democrats are pursuing legislation, released late Monday, that would temporarily raise the SALT cap to $20,000 for married couples in 2019, before repealing it fully in 2020 and 2021.
The cap would revert back to $10,000 in 2022 and would be paid for by raising the top individual tax rate to 39.6% from 37%. The bill also would decrease the income threshold for the highest tax bracket.
The higher rates and new brackets would stay in effect through 2025 when the Republican tax law is scheduled to expire. The SALT deduction and rate changes would raise a net $6.2 billion over a decade, the congressional scorekeeeper, the Joint Committee on Taxation, estimated Tuesday.
“We’re going to do it,” said Representative Bill Pascrell, a New Jersey Democrat who is sponsoring the bill. “You just keep on moving. You don’t back off and surrender and pout.”
The House Ways and Means Committee is scheduled to vote Wednesday on the bill. With the House eyeing a Dec. 20 departure for the year, Democrats leading the effort say they’re seeking a floor vote by the end of 2019.
But the measure will be competing for floor time against several other pressing issues. Lawmakers are finalizing articles of impeachment against President Donald Trump, working to pass spending legislation to avert a government shutdown before the Christmas holiday and potentially considering a revised trade deal between the U.S., Mexico and Canada.
Still, SALT remains a priority for many Democrats who view it as a way to fix one of the most politically contentious portions of the 2017 Republican tax law. Democrats say Republicans targeted residents of high-tax states like New York, New Jersey and California, which are largely represented by Democrats, to pay for their $1.5 trillion corporate and individual tax cut.
The tax break was previously unlimited, with some restrictions if the taxpayer was subject to the alternative minimum tax. Raising the cap for married couples this year and the two-year repeal will mean more people in those high-tax states will see their liabilities decrease temporarily. Republicans have criticized the bill, saying the savings will go to high-income taxpayers who don’t need a tax subsidy.