‘Mr. SALT’ and N.J. Ally Fight Ocasio-Cortez to Revive Tax Break
(Bloomberg) -- A major push by a group of U.S. lawmakers to secure an expansion of the federal deduction for state and local taxes -- which on Monday won inclusion in a critical budget plan -- owes much to a pair of onetime roommates in the nation’s capital.
One, Tom Suozzi, has the nickname “Mr. SALT,” and the other, Josh Gottheimer, is co-chief of a sometime influential bipartisan House group known as the Problem Solvers.
Together, they’ve helped to gather a caucus of 33 representatives battling to remove or raise the $10,000 cap on SALT deductions imposed in the 2017 Republican tax-cut package. Success at getting that included in final legislation this fall would offer relief to middle and higher-income residents in higher-tax states such as New York and New Jersey.
The duo sees the legislative vehicle for the bulk of President Joe Biden’s longer-term economic proposals -- a $3.5 trillion bill made up mostly of social spending measures, funded in part by tax hikes -- as a crucial opportunity to win SALT relief.
The budget blueprint for that package, released by Senate Democrats on Monday, explicitly provided for making the SALT deduction more generous. The White House had left out addressing SALT in its original American Families Plan, leaving it to legislators to address and fund.
Suozzi brings the perspective of a former local official to a deduction that’s viewed by the SALT caucus as vital to supporting the economies of higher-tax areas that are in turn critical to national output.
“For us, this is an existential threat,” explains Gottheimer, who in pre-pandemic days shared living quarters with Suozzi when the two were in the capital. “If the tax base leaves, if well-to-do people leave, that drains the tax base and hurts the programs we all care about.”
Suozzi’s district includes portions of Long Island and Queens and Gottheimer’s spans the northernmost portions of New Jersey. The two both took office in 2017, months before President Donald Trump signed the tax bill that included a SALT cap to help pay for federal corporate and income-tax cuts.
Suozzi, 58, and Gottheimer, 46, have amassed enough support that Biden’s economic agenda can’t pass the House without addressing their demands, provided their block of Democrats stays united.
“No SALT, No Deal,” is Suozzi’s slogan. Gottheimer says, “No SALT, No Dice.”
Suozzi, a lawyer and CPA, and Gottheimer, a former speechwriter for Bill Clinton who has worked for Microsoft Corp. and Ford Motor Co., 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.
They argue it prompts wealthier people to move to low-tax places like Florida and Texas, which hurts their state’s ability to fund robust social services, an issue that should be a concern to both moderates and progressives.
Liberals counter that the deduction aids higher-income taxpayers, and shouldn’t be a priority given greater need to enhance federal support for lower-income families in the social-spending focused bill. It would cost hundreds of billions of dollars to restore the write-off to pre-Trump levels, with more than half of those benefits flowing to households earning at least $1 million.
Alexandria Ocasio-Cortez, who represents a House district adjacent to Suozzi’s, has called his position “a gift to billionaires.”
“We can have a conversation on the policy, but it’s a bit of an extreme position, to be frank,” she said.
The rejoinder for SALT relief advocates is that passage can help Democrats in competitive districts.
“This is not a giveaway to the rich -- this is an essential feature to our progressive states,” Suozzi said. “The only way we can hold our majority, or expand our majority, is to address this issue.”
Suozzi and Gottheimer have been closely linked since they came to Congress in 2017. Before Covid-19, the pair were roommates when in Washington, living in a shared apartment decorated with a duck-patterned couch that was a cast-off from Gottheimer’s cousin. Mike Florio, Suozzi’s chief of staff, also lived with them, sleeping on an air mattress in a walk-in closet on the days he was in town.
Suozzi, as county executor for Nassau County, where the median property tax bills consistently rank among the top-five highest in the country, earned praise from constituents for working to institute a cap on that levy. He earned the nickname Mr. SALT for bringing up the issue in nearly every meeting of the Ways and Means Committee, the panel responsible for tax issues.
Gottheimer, who flipped his district from Republican control, arrived at Congress with a raft of corporate-communications experience, and has gone on to co-chair the bipartisan Problem Solvers Caucus -- which gained some success in pushing forward a compromise pandemic-relief plan in late 2020.
“Everything I do is bipartisan. I don’t go out to dinner without Republicans,” he quipped. Gottheimer also said, “I take much more of the ‘let’s get 80% of what we want, and get it done’ approach.”
Democrats will be the ultimate deciders on whether SALT relief passes, as GOP members oppose the broader social-spending bill it would be part of. Senate Majority Leader Chuck Schumer has sponsored a version of Suozzi’s SALT restoration bill in his chamber.
House Speaker Nancy Pelosi, who also represents a district with some of the highest tax bills in the country, has said she’s sympathetic to the issue, though has stopped short of endorsing any SALT plan. The initiative got its biggest momentum boost last month, when Senate Budget Committee Chair Bernie Sanders agreed to include a SALT provision in the draft $3.5 trillion budget deal.
“In the beginning, this was a long, long shot because the White House didn’t include it,” Suozzi said. “But, you know, my first campaign slogan was ‘Suozzi Gets It Done.’ I feel like we are going to get this done.”
©2021 Bloomberg L.P.