Excerpt:
House Democrats continue to search for a way to satisfy lawmakers who want to scrap the deduction limit on state and local taxes without losing progressives wary of a tax cut that would overwhelmingly benefit the wealthy.
The budget blueprint Democrats passed this summer instructs lawmakers to include some form of SALT cap relief in a tax-and-spend plan of up to $3.5 trillion.
A full repeal would be costly and politically difficult to pass with razor-thin margins in both chambers. But a coalition of lawmakers from New York, New Jersey, and other states with high tax rates continue to insist that is what it will take for them to back the legislation.
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Suozzi is one of the leaders of the “SALT Caucus”, an alliance of more than 30 lawmakers who want to roll back the $10,000 deduction limit established in the Republican-led 2017 tax law. While they argue that the cap unfairly targets Democrat-dominated states and encourages people to move to Florida and other low-tax states, progressives counter that expanding the deduction shouldn’t be a priority in a social spending bill because the lion’s share of the benefit would go to the wealthy.
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That [2019] bill passed the House, but 16 Democrats voted against it, including New York Representative Alexandria Ocasio-Cortez, who has described a full repeal as a “gift to billionaires.” Democratic leadership is dealing with a much narrower majority this Congress and can’t afford to lose that many votes with no Republicans expected to support the reconciliation package.
Author(s): Kaustuv Basu
Publication Date: 9 September 2021
Publication Site: Bloomberg