Democrats’ SALT Cap Proposals Don’t Yet Have Elizabeth Warren’s Support

(Bloomberg) -- Senator Elizabeth Warren said she isn’t yet sold on compromises offered so far -- including one crafted by fellow progressive Senator Bernie Sanders -- to partially restore the state and local tax deduction because of her concern billionaires could benefit. 

“I didn’t come here to help billionaires cut their taxes,” the Massachusetts Democrat told reporters on Thursday. “I want to see what it does for the billionaires. I’m not here to help those guys.”

A proposal in the House would increase the amount that can be deducted on federal taxes to $72,500 from $10,000, but without any restriction on a taxpayer’s income. An emerging compromise discussed between Sanders and Bob Menendez of New Jersey would limit the deduction to people making up to about $400,000. 

Some billionaires, however, are able to avoid declaring much income at all in some years because of assorted tax breaks or because their wealth is often largely an unrealized, untaxed gains in assets.

Warren said a SALT modification “becomes much more attractive” if it is paired with Senate Finance Chairman Ron Wyden’s proposed billionaire tax, which would tax the unrealized capital gains of the very wealthy.

Wyden has said attaching a billionaire tax or other measures targeting the wealthy that he has proposed would ensure a final tax package was progressive. He also told reporters he has reached out to West Virginia Senator Joe Manchin’s office on billionaire taxes. 

Manchin has floated a 15% minimum tax on wealthy people -- what he called a patriotic tax -- but hasn’t detailed the proposal.

In the House, Ways and Means Chairman Richard Neal called the House proposal “sturdy” for now, and suggested advocates start negotiating with the Senate.

Any bill that makes it out of the House initially is already all-but-certain to see changes in the Senate, requiring a final House vote before heading to President Joe Biden’s desk.

©2021 Bloomberg L.P.