Tax deductions

Democrats Consider ‘SALT’ Relief for State and Local Tax Deductions

WASHINGTON – Democrats are considering changing the law to allow Americans to deduct more state and local taxes from their federal returns as part of a major economic set of liberal priorities, a policy that would help heavily taxed states primarily in the Northeast.

A group of House Democrats pushing to raise the “SALT” cap, most of them from New York and New Jersey, insisted on Wednesday the deduction is progressive and the $ 10,000 cap created in the Republican tax law of 2017 is “anti-union” and hurts the middle class.

The SALT cap has become an internal challenge for Democrats. The party’s liberals had resisted the repeal of the new limits, arguing it would benefit the wealthy. But supporters of the cap reversal now argue that it would make it easier for states to tax the rich, to the benefit of teachers and firefighters.

The Non-Partisan Tax Policy Center find that if the SALT cap were repealed entirely, 70 percent of the benefits would go to people with annual incomes over $ 500,000, and most five-figure middle-income Americans would reap no benefits.

But Democrats whose districts have been hit hardest by the SALT cap are offering a new argument. They say the deduction makes it easier for states to tax the rich and use the money to provide government benefits, including for union workers. And they are calling on union leaders to get the message across.

The SALT limit “truly places an unfair burden on all of our towns and cities across the United States,” said Ed Kelly, president of the International Association of Fire Fighters, which has 285,000 firefighters and medical professionals. “It has put a lot of stress and pressure on our ability to protect you, to educate your children, to take care of our most vulnerable, like our elderly.”

Kelly stood alongside 10 Democrats, led by Rep. Tom Suozzi, DN.Y., and comprising politically vulnerable members, including Rep. Mikie Sherrill, DN.J., and Rep. Lauren Underwood, D-Ill. They insist that a budget reconciliation bill raises the SALT ceiling.

“No SALT, no deal”

Democratic leaders have started looking for ways to appease this constituency. A draft proposal from Sen. Bernie Sanders, I-Vt., Chairman of the budget committee and key player in drafting the legislation, includes $ 120 billion for five-year ‘SALT’ relief, according to a copy obtained by NBC News.

A source close to the behind-the-scenes negotiations said an idea being discussed among Democrats was to remove the cap only for those earning $ 400,000 or less, but nothing has been finalized.

“No SALT, no deal,” Suozzi said, swearing that he and his allies had the votes to block a bill that changes the tax code if it doesn’t also raise the SALT cap.

He called “a very positive development that Senator Sanders included it in his proposal.”

Rep. Tom Malinowski, DN.J., who barely was re-elected for a second term last November, said the economic bill would be like “a very complicated puzzle”.

“The puzzle doesn’t get built if we don’t address the SALT deduction,” he said.

SALT’s politics are delicate for Democrats. At the local level, this could help members of suburbs at risk where the deduction is heavily used. But at the national level, it would undermine their message that the rich must pay more taxes. President Joe Biden, in particular, left SALT out of his tax review proposals and focused on raising rates for businesses and people earning $ 400,000.

Senatorial Minority Leader Mitch McConnell, R-Ky., Said earlier this year: “House Democrats are demanding a special SALT exception that would reduce taxes for the rich in the blue states.”

Sanders said any SALT relief should be targeted.

“What I would argue is that there are middle class families in states with very high property taxes who pay a lot of state and local taxes, and I think we need to support them,” Sanders said Wednesday on MSNBC. , adding that “billionaires who own a huge mansion” should not benefit.

“A SEL March, as Gandhi did”

Some Liberal Democrats are also wary of expanding the SALT deduction.

“If this were a stand-alone bill, I would probably vote against it, as I have done before. I think there are better ways to provide help to the people who have it most. need, ”said Rep. Mark Pocan, D-Wis., a member of the Progressive Caucus. “But this is not my problem that I would go to the grave on.”

At Wednesday’s press conference outside Capitol Hill, Democrats pushing to raise the SALT cap sought to argue in various ways that it would ultimately benefit the middle class.

Sherrill said New Jersey has “the best public school system in the country” as well as relatively high salaries for teachers, firefighters and nurses. “The SALT deduction cap threatens our ability to continue to make these investments,” she said.

Malinowski argued that those who would not directly benefit from lifting the SALT cap would gain indirectly, citing as an example tenants whose landlords had increased rent due to their higher tax bills due to the 10 deduction limit. $ 000.

Representative Jamie Raskin, D-Md., Said he was representing middle class people “seriously affected” by the SALT cap, who want relief.

“We must have a SALT walk, like Gandhi didHe said, making his colleagues laugh. “

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