Some moderate Democrats are hinging their support for their party’s $3.5 trillion budget on reinstating state and local tax deductions, setting up another contentious fight as they work with slim majorities to pass the bulk of President Joe Biden’s agenda.
“No SALT, no deal,” New York Rep. Tom Suozzi, a moderate from Long Island, said in a statement Tuesday. “I simply cannot stand by while the hardworking people across all of New York are hurting because of the SALT cap.”
SALT deductions were capped at $10,000 in the Tax Cuts and Jobs Act, which Republicans passed in 2017. They allow taxpayers to deduct taxes already paid to state and local governments, meaning that Americans can deduct more in places where non-federal taxes are higher, including blue states and affluent suburban areas.
Restoring the deduction has the support from most of New York’s House delegation, Sen. Kirsten Gillibrand and Majority Leader Chuck Schumer. Seven Democratic governors in April said the original cap was “based on politics, not logic or good government.”
“This assault disproportionately targeted Democratic-run states, increasing taxes on hardworking families,” they said in a letter to the White House.
Progressives, however, have spoken out against removing the cap, labeling it as nothing more than a tax cut for wealthy Americans in blue states.
“It sends a terrible, terrible message when you have Republicans telling us that this is a tax break for the rich,” Vermont Independent Sen. Bernie Sanders, the chair of the Senate Budget Committee which authored the $3.5 trillion plan, said in May. (RELATED: Sen. Sanders Rips One Of Democrats’ Proposed Tax Cuts: ‘A Terrible, Terrible Message’)
But as of now, language for a full repeal is included in the resolution which both the House and Senate have advanced. If omitting it lost the votes of even a handful of moderates, it could tank the entire bill in a Congress where Democrats have just three votes to spare in the House and zero in the Senate.
“In fairness to Schumer and [House Speaker Nancy] Pelosi,” Sanders said in May, “it is hard when you have tiny margins, but you have got to make it clear which side you are on — and you can’t be on the side of the wealthy and powerful if you’re going to really fight for working families.”
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