New York Democrats Push Repeal of Cap on Local Tax Deductions
By Joseph De Avila
More than a dozen New York Democratic lawmakers sent a letter to
U.S. House leadership Tuesday asking for a full repeal of the cap
on state and local tax deductions, adding pressure to negotiations
over the Biden administration's proposed infrastructure plan.
The administration has called for paying for its infrastructure
package by raising taxes on corporations. A growing number of House
Democrats say any proposed changes to the tax code should include a
full restoration of the SALT deductions.
Republicans largely oppose the infrastructure proposal, and
Democrats -- who hold a seven-seat advantage in the House of
Representatives -- can afford to lose only a few votes on any
legislation. That has given the growing group of lawmakers pushing
for a repeal of the SALT cap significant influence on negotiations
over the infrastructure package.
"This issue is so critical to our state and our constituents
that we will reserve the right to oppose any tax legislation that
does not include a full repeal of the SALT limitation," said the
New York lawmakers' letter, which was viewed by The Wall Street
Journal. Seventeen members of Congress from the state signed the
The Trump administration approved the $10,000 cap on SALT
deductions as part of broader tax changes in 2017. Previously,
there was no cap on such deductions. The cap on deductions
disproportionately affected tax filers in high-tax states like New
York, New Jersey and California, whereas studies have shown that
the Trump tax law resulted in a net tax reduction for most tax
Many Republicans support the SALT cap and say it helps prevent
the federal tax code from being used to subsidize high taxes levied
by state and local governments.
Democrats who oppose the SALT cap said it unfairly punishes blue
states for having higher property and income taxes that are used to
pay for costly services like healthcare and transportation. New
York's population would be about 104,000 higher if the SALT cap
were eliminated, according to a study by New York state and the
Nelson A. Rockefeller Institute of Government, a public-policy
New York Rep. Tom Suozzi, a Democrat and one of the main
proponents of repealing the cap, said restoring the full deduction
was an issue of fairness and would improve the lives of
"Middle class in New York and New Jersey and Connecticut is very
different than it is in Oklahoma and Arkansas and Tennessee," Mr.
Suozzi said. "If somebody makes $150,000 in the tri-state, you are
When asked for comment, a spokesman for House Speaker Nancy
Pelosi (D., Calif.) referred to comments she made earlier this
month where she said that she hoped to include a repeal of the SALT
cap in the infrastructure bill.
"I'm sympathetic to their position," Mrs. Pelosi said. "I would
say that I would withhold any comment about whether you're gonna
vote for a bill or not until you see what the bill is."
Senate Majority Leader Chuck Schumer (D., N.Y.) also supports
repealing the SALT cap, and White House press secretary Jen Psaki
has said the Biden administration would be happy to discuss with
lawmakers a SALT repeal and ways to make up for the lost
Some studies show that a repeal of the SALT cap would
disproportionately benefit the wealthy. The top 1% of earners would
receive more than half of the tax cut if the deduction were fully
restored, according to an analysis by the Tax Policy Center, a
Washington research group.
Republican Minority Leader Mitch McConnell, a supporter of the
cap, said repealing it is "designed to overwhelmingly benefit
wealthy residents of blue states" during a speech Monday on the
Democratic Rep. New Jersey Rep. Josh Gottheimer, who supports
repealing the cap, rejected that argument.
"I know people think this is just an issue that affects just the
very well-to-do," Mr. Gottheimer said in an interview. "But that's
not true. It hits the middle class where we live."
While some Democratic lawmakers like Mr. Suozzi have drawn clear
lines in the sand and say they won't support tax changes without a
full restoration of the SALT deduction, others have left room for
"We can compromise on this issue. It's not an all-or-nothing
situation," said New Jersey Rep. Bill Pascrell, a Democrat, who
supports the repeal.
But, he said, if "I feel like we are being ignored, our
position, then all hell is going to break loose and the possibility
of us not voting for it."
Write to Joseph De Avila at firstname.lastname@example.org
(END) Dow Jones Newswires
April 13, 2021 18:45 ET (22:45 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.