House Democrats said they will propose a significant change 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 President Joe Biden’s agenda and pledged to “undo” the cap that was part of the Republican’s 2017 tax law.
“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 said.
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 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’,” Suozzi said in a statement earlier Monday.
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.
Suozzi and other advocates for restoring the tax break have argued that limiting the SALT deduction hurts residents in their districts and others like them because it raises taxes on middle-income earners who aren’t able to claim all their property and income taxes against the federal tax bills.
House Speaker Nancy Pelosi can afford to lose no more than three Democratic votes to get the final package through in the face of expected unified Republican opposition.
“As work continues between the House, Senate and White House on this and other unfinished but critical items, fixing Republicans’ SALT cap attack on progressive state and local governments absolutely remains a priority for House Democrats in the final reconciliation package,” Pelosi spokesman Henry Connelly said in a statement.
The Ways and Means Committee, like other House panels, have a soft deadline of Wednesday to complete the drafting of their parts of the Biden reconciliation bill and send the legislation to the Budget Committee.
This article was provided by Bloomberg News.