SALT-Break Increase Seen as Likely After Omission in Biden Plan
(Bloomberg) -- Democratic lawmakers expressed confidence that Congress will expand the federal deduction for state and local taxes as part of President Joe Biden’s social-spending package even though the proposal was omitted from a framework agreement announced Thursday.
“SALT will be in the endgame, yes,” House Ways and Means Chairman Richard Neal told reporters after a House Democratic caucus meeting with Biden at the Capitol on Thursday. He said he’s “waiting to see” if the SALT plan will resemble the latest idea of restoring the full deduction for two years, then returning to the current $10,000 limit for four years.
Representative Bill Pascrell of New Jersey said Thursday morning that talks were heading toward a two-year suspension of the cap, which would then be imposed again in 2024-2027. Democrats say they would try to repeal it before it kicks back in again, though there is no guarantee they’d be able to get that through Congress.
Another New Jersey representative, Tom Malinowski, said another option lawmakers are considering is setting an “extremely high” cap on the deduction and extending that ceiling for several years beyond 2025 -- when the current limit is scheduled to expire. That would mean that the very wealthiest would still lose out on some SALT deductions, but that the vast majority of taxpayers would be able to write off their full liabilities.
The high-cap option could end up adding nothing to the deficit, Malinowski said, though he declined to say what the limit would be or for how many years it would need to be in effect for the plan to pay for itself.
SALT has emerged as one of the key issues for a contingent of Democrats, largely representing high-tax areas in New York, New Jersey and California. They have said that SALT, which was restricted in the 2017 Republican tax law to a $10,000 deduction, must be included in the Biden agenda to win their votes.
“We’ll get SALT,” New Jersey Representative Josh Gottheimer, who’s helping lead advocates of the tax break, said as he entered the meeting with Biden.
Democratic Senator Robert Menendez of New Jersey said he still wants significant SALT relief and continues to hope to reach a deal on prescription drug pricing, another item omitted from Thursday’s framework.
“The framework is not a final product as far as I’m concerned,” Menendez said.
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