Rep. Alexandria Ocasio-Cortez took aim at some of her fellow Democrats this week over their demand that President Biden's $2.3 trillion spending plan include a full repeal of the cap on state and local tax deductions, accusing them of fighting for a provision that's a "gift to the billionaires."
"I don't think that we should be holding the infrastructure package hostage for a 100% full repeal on SALT, especially in the case of a full repeal," Ocasio-Cortez, D-N.Y., told reporters on Thursday. "I think we can have a conversation about the policy, but it's a bit of an extreme position, to be frank."
Many Democrats from high-tax states such as New York, New Jersey and California have been pushing to lift the $10,000 SALT deduction cap, which was imposed by Republicans with the passage of the 2017 tax cuts. Their effort gained momentum this week, when a group of roughly bipartisan House members directly tied the repeal to Biden's planned infrastructure proposal.
The 30-member coalition threatened to withdraw support for any changes to the tax code in the measure unless it also included a complete restoration of the SALT deduction. Biden has called for raising the corporate tax rate to 28% from 21% and increasing the global minimum tax rate paid by U.S. businesses to 21% in order to fund the multitrillion-dollar initiative.
With a narrow 218-212 majority in the House, Democrats can risk losing the support of just a handful of members without imperiling the bill's odds of passing.
But eliminating the SALT deduction cap would require Democrats to vote for a policy that disproportionately benefits wealthy Americans living in blue states. Households earning at least seven figures a year would receive the majority of the benefits, according to the Joint Committee on Taxation.
"I think it's just a giveaway to the rich," Ocasio-Cortez said. "And I think it's a gift to billionaires."
The White House has said it welcomes feedback from lawmakers on how best to address infrastructure, which is broadly viewed as a bipartisan issue in Washington, but has remained cool to the idea of a SALT tax repeal.
White House press secretary Jen Psaki said Thursday that if lawmakers want to restore the SALT deduction, they will need to find a way to pay for it.
"It is not a revenue raiser and so it would add costs, and potentially significantly, to a package," she said. "There'd have to be a discussion about how that would be paid for what would be taken out instead. And then there's sort of a discussion of what's most important to achieving our overarching objectives."