Republicans who oppose the state and local tax (SALT) cap will meet with President-elect Donald Trump at Mar-a-Lago on Saturday. Trump, who promised to "get SALT back" during his 2024 presidential campaign, aims to address the policy as the current cap is set to expire in 2025.
The SALT deduction allows taxpayers who itemize their federal taxes to deduct certain state and local taxes, capped at $10,000 per year for joint filers and $5,000 for single filers, as established by the 2018 Tax Cuts and Jobs Act (TCJA). This includes property taxes and either state income or sales taxes, but not both, according to the Tax Foundation. Prior to the TCJA, there was no cap, making the policy highly controversial. Democrats and residents in high-cost states oppose the cap, arguing that it unfairly impacts taxpayers in such regions. Meanwhile, Republicans see the cap as essential for maintaining funding and reducing the national deficit.
Trump has been meeting with congressional Republicans since the start of the 119th Congress to negotiate agreements among competing factions within the U.S. House and Senate. One of these factions, known as the "SALT Republicans," is pushing for either the complete removal of the cap or, more likely, a significant increase in the cap amount. Proposals include raising the cap from $10,000 to $30,000, but critics argue that this would add approximately $450 billion to the national deficit.
The group of Republicans meeting with Trump includes Representatives Mike Lawler, Nick LaLota, Nicole Malliotakis, and Andrew Garbarino from New York, Representative Young Kim from California, and Representative Tom Kean Jr. from New Jersey. Lawler has introduced the SALT Fairness and Marriage Penalty Elimination Act, proposing a $100,000 cap for individual filers and a $200,000 cap for joint filers. Lawler referred to the current cap as an "unjust penalty."
New York Governor Kathy Hochul strongly opposes the cap, claiming it deprives middle-class families of their hard-earned money. However, analysis from the Tax Policy Center (TPC) suggests that repealing the cap would primarily benefit high-income households. Households earning $63,000 or less would see no significant tax relief, while those at the top of the income bracket could benefit significantly.
Representative Chip Roy of Texas, a member of the House Freedom Caucus, has prioritized deficit reduction and sees the SALT issue as pivotal to achieving it. Lawler echoed these concerns, stressing that the SALT cap disproportionately affects taxpayers in his district, particularly in the Hudson Valley, and exacerbates the state's affordability crisis.
Governor Hochul has called on Republicans to deliver a full repeal of the SALT cap, arguing that it has cost New Yorkers billions annually since 2018. She emphasized that Republicans have drained billions from their constituents and must now deliver a full repeal without compromise.
As the deadline approaches, Republicans will need to reconcile their positions ahead of Trump's inauguration on January 20. The goal is to craft a reconciliation bill that can pass without Democratic support, focusing on a range of issues, including energy, border security, and tax policy. This bill offers lawmakers an opportunity to advance their key policy priorities.
Comments
Post a Comment