WASHINGTON – House Democrats left the restoration of the full state and local tax deduction out of a proposed tax package they outlined Sunday, but a day later several leaders on the issue vowed that they will enact "meaningful SALT relief."
The debate over the so-called SALT deduction could become a huge headache for Democrats as they try to come up with ways to pay for a "human infrastructure" package of up to $3.5 trillion, and Monday's quick about-face proved it.
Congress, led by a narrow and deeply divided Democratic majority, will return to the Capitol next week facing a host of deadlines and tough choices.
A group of lawmakers from high-tax states, including Rep. Tom Suozzi, a Long Island Democrat, has vowed to not support any such spending bill that didn't include changes in the SALT deduction, which the Republican Congress of 2017 limited to $10,000 per taxpayer.
And not long after reporters started noting that the Democratic tax proposal did not include changes to the SALT deduction, Suozzi joined Rep. Richard Neal – chairman of the tax-writing Ways and Means Committee – and Rep. Bill Pascrell of New Jersey in a statement.
“We are committed to enacting a law that will include meaningful SALT relief that is so essential to our middle-class communities, and we are working daily toward that goal,” the lawmakers said.
More than 30 House members – including Rep. Brian Higgins – have banded together to try to fully restore the state and local tax deduction that congressional Republicans capped at $10,000 in 2017.
Meanwhile, Suozzi issued a separate statement of his own, preserving the threat that he and his colleagues from high-tax states – who together could sink the spending package – made earlier.
“I have been consistent for six months: ‘No SALT, no deal'," Suozzi said. "I have spoken personally with the Chairman, the Speaker, and Senator Schumer. I am confident that a SALT fix will be part of the final package.”
The problem is, Democrats could conceivably lose House votes on the left if they fully restore the SALT deduction.
"I think it's just a giveaway to the rich, and I think it's a gift to billionaires," Rep. Alexandria Ocasio-Cortez, a Bronx Democrat, told HuffPost earlier this year.
There's no doubt, though, that restoring the full deduction would benefit some middle-income homeowners, too.
The Biden administration on Thursday signaled that it's open to the restoration of the full federal deduction for state and local taxes.
According to figures that Rep. Brian Higgins, a Buffalo Democrat, obtained from County Executive Mark C. Poloncarz's office, approximately 125,000 Erie County households suffered a tax increase because of the limit placed on the SALT deduction, with the average increase reported at $815 a year.
Higgins, a member of the Ways and Means Committee, said he believes Congress will come up with a solution that eases the burden of the $10,000 SALT cap.
"This is a sort of a process that's evolving," he said. "It remains fluid."
Senate Majority Leader Charles E. Schumer last week also floated the possibility of giving homeowners some sort of SALT deduction break in the Democrats $3.5 trillion spending bill.