SALT shakeup: Democrats pressure Biden to repeal tax cap
House Dems send letter to President before infrastructure proposal
As President Joe Biden unveils a multi-trillion-dollar infrastructure proposal this week, House Democrats are calling on him to repeal the Trump-era limit on state and local tax deductions, or SALT.
Rep. Tom Suozzi, who represents parts of Queens and Long Island, along with Reps. Mikie Sherrill, Josh Gottheimer and Bill Pascrell of New Jersey, have publicly stated that they want to see SALT reinstated in the upcoming package, Politico reported. The legislators went so far as to say they’d oppose future tax increases without a restoration of the SALT deduction — and privately, other legislators reportedly share the sentiment.
Eleven democrats on the Ways and Means Committee sent a letter to Biden calling for the addition to the upcoming infrastructure package.
“We were willing to briefly postpone discussions of this subject,” the group wrote in the letter, which was obtained by the publication. “Given the gravity of this issue for our constituents, however, we must ask to open a dialogue with you immediately about including SALT relief in the upcoming infrastructure package.”
The $10,000 cap on SALT deductions shook the real estate industry when it was first enacted in 2017. However, the chilling effect on buyers appears to be thawing, according to a recent report in The Real Deal.
Some liberal groups and House Democrats, however, argue that repealing the SALT limit would largely help the wealthiest families, saving them tens of thousands of dollars annually. A Brookings Institution study last year showed 57 percent of the benefits would go to the top 1 percent of homeowners — an average of $33,100 each. One-quarter of the savings would go to the top 0.1 percent of taxpayers, who would save nearly $145,000 per year, on average.
While 96 percent of the repeal’s savings would go to the top fifth of earners, the middle 60 percent of earners would save an average of $27 annually, Brookings found. But the calculations assumed no offsetting changes in tax rates would be made at the same time.
Repealing the deduction would cost nearly $89 billion in 2021 alone.
[Politico] — Sasha Jones