Democrats push 1% friendly SALT cap repeal amid Biden calls for tax hikes on the wealthy
NY lawmakers ramp up calls to repeal the deduction as the White House prepares for a potential tax code overhaul
Democrats are making a push for President Biden to repeal the controversial $10,000 cap on state and local tax (SALT) deductions as he considers several tax proposals to fund forthcoming infrastructure legislation.
Rep. Tom Suozzi, D-N.Y., said in a statement this week that he would not support any tax increases unless they are accompanied by plans to restore the full state and local tax deduction.
“No SALT, no deal,” Suozzi said. “I am not going to support any change in the tax code unless there is a restoration of the SALT deduction. The cap on the SALT deduction has been a body blow to New York and middle-class families in New York.”
Suozzi noted, as New York Gov. Cuomo has in the past, that the cap has led to a loss of tax-paying residents from the state.
The 2017 Tax Cuts and Jobs Act imposed a $10,000 cap on state and local tax deductions, which was perceived as having a negative effect on wealthy residents in blue states – like New York and New Jersey – where income and property taxes are higher.
The average SALT deduction for Westchester and Rockland counties in New York in 2017 was $36,263 and $22,249, respectively, according to the New York lawmakers. Suozzi represents the 3rd Congressional district on Long Island where the average SALT deduction in 2017 was $18,386 according to data released by Suozzi's office.
Senate Majority Leader Chuck Schumer, D-N.Y., introduced companion legislation alongside Suozzi to eliminate the SALT cap earlier this year.
Schumer, whose office did not return FOX Business' request for comment, is prepared to bring up restoring the provision when talks begin about making changes to the tax code, CNBC reported this week.
Cuomo has also made repeated public calls for the deduction to be restored.
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Biden is expected to detail his plans to pay for his infrastructure plan on Wednesday, which will include raising revenue through tax increases. Repealing the SALT cap, however, would cost the government revenue.
Republicans have characterized the effort to repeal the cap as a tax cut for the wealthy. An analysis conducted by the Tax Foundation estimates its repeal would cost $600 billion in revenue over the course of a decade, with the largest relief aimed at the top 1% of earners.
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Biden has not mentioned the provision in his tax proposals.
The White House said on Monday when discussing his ideas to raise rates on the wealthiest Americans and corporations that he believes he has an opportunity to rebalance and address the tax code in a way that would make it more progressive.