House Democrats have come up with a compromise plan to raise the limit on deductions for state and local taxes for Americans making roughly less than $500,000, lawmakers said.
The emerging deal, the latest attempt to strike a SALT compromise, would allow unlimited deductions for taxpayers earning up to $400,000, with a phase out for those earning up to $500,000, a personal familiar with the discussions said.
The proposal worked out between Representatives Tom Malinowski of New Jersey and Katie Porter of California would get the support of progressives, who have rejected a full suspension of the SALT cap as a giveaway to the rich, Representative Pramila Jayapal, a top progressive, said.
The proposal is an alternative to a five-year suspension of the cap some Democrats were pushing Tuesday. That idea hit roadblocks from progressives who said it would give a tax break to billionaires.
Malinowski said the new plan would be included in the text of legislation to enact President Joe Biden’s economic agenda, which may be released as soon as Wednesday afternoon. Malinowski declined to give any details.
New Jersey Senator Bob Menendez, a SALT cap opponent, and progressive Senator Bernie Sanders have both spoken positively about a roughly $400,000 cap this week, giving the idea political momentum.
The SALT cap is one of several items that have been under negotiation for inclusion in the roughly $1.75 trillion tax and spending plan that makes up the bulk of Biden’s agenda. Lawmakers from the Northeast and other high-tax areas have been lobbying to suspend or significantly raise the cap—which was part of the 2017 tax law—and have threatened to withhold support for the overall package if it’s not included.
This article was provided by Bloomberg News.