Democrats risk losing their edge in key suburban districts amid a congressional stalemate over President Joe Biden’s economic agenda that threatens plans to expand a tax break for well-off homeowners.
Many voters in affluent suburbs across the country from New Jersey to Washington state abandoned the Republican party in the 2018 congressional elections, helping to swing the House into Democratic control one year after the GOP set a $10,000 limit on the long-standing federal deduction for state and local taxes, or SALT.
Those same districts are once again up for grabs as Democrats wrangle over the details of the tax and spending package, including the fate of SALT relief. Uncertainty over when -- or if -- a package containing SALT could pass threatens to jeopardize Democrats’ chances of maintaining their slim congressional majorities.
Representative Sean Patrick Maloney, who leads House Democrats’ campaign arm, says delivering relief from the SALT cap is “essential” for the party’s election prospects.
“We need to get that done. It’s not the only thing, but it’s a big thing,” said Maloney, whose district in New York’s suburban Westchester County is among those disproportionately hit by the SALT cap.
More than half of the 28 Democratic House incumbents who wrested their seats from Republicans in the 2018 suburban shift represent districts where the average SALT deduction was reduced by more than $10,000 because of the cap, according to a Bloomberg analysis of 2019 IRS data, the most recent available. In all but two of those districts, the average reduction was more than $5,000.
Among the 26 “Frontline” House seats that Democrats’ campaign committee has designated as most vulnerable, nine represent areas where the limit reduced the average SALT deduction by more than $10,000. Some other frontline districts are rural and less effected.
Nationally, more than 88% of taxpayers take a standard deduction rather than itemizing their taxes and only 11% of all filers take the SALT deduction. Sixteen of the 26 Democratic Congressional Campaign Committee’s Frontline incumbents represent districts with above-average numbers of residents impacted.
Democrats were so eager to lift the cap that a provision to do so was made retroactive in the House version of the Biden economic package, meaning taxpayers who benefit would get larger refunds when they file returns this April -- in time for Democrats to claim credit before the election.
But that is now on hold, with Democratic Senator Joe Manchin of West Virginia demanding the bill be revamped or set aside. The SALT deduction increase, meanwhile, has been under attack from some progressive Democrats, including Representative Alexandria Ocasio-Cortez, who called it “a giveaway to the rich,” a criticism Republicans have echoed.