DDemocratic leaders on Monday presented plans to bypass GOP obstructions to change the cap on deductions for state and local taxes paid, a tax break largely for the wealthy opposed by most Republicans and some Democrats.
The Senate Democratic budget proposal for fiscal 2022 released on Monday calls for “SALT ceiling relief” among its sweeping measures. While the budget is neither legislative nor binding, its approval would unlock a legislative process that would allow Democrats to pass legislation by simple majority in the Senate, meaning Republicans could not block it by using the budget. systematic obstruction.
The proposal comes after vocal supporters of the self-proclaimed “SALT caucus” pushed for changes to the tax code. A $ 10,000 cap on the SALT deduction, which largely benefits high-income households, was imposed by Republicans as part of the 2017 Tax Cuts and Jobs Act, signed by the President of then, Donald Trump.
Members of the SALT caucus, which includes both Republicans and Democrats, are from high-tax states and argue that the cap doesn’t just hit the wealthy because of the cost of living in their districts, although the Tax Policy Center found that only 3% of middle-income households would pay less tax if the cap was removed.
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âThis group will work together to educate people on how the middle class in my district or in many districts here is very different from the middle class in other districts across the country,â said Representative Tom Suozzi, a New Yorker. Democrat and SALT Caucus Co-Chair, April.
The raising of the ceiling for the SALT deduction met with opposition from some legislators. GOP Senator Pat Toomey of Pennsylvania and other lawmakers argued that the change would force low- and middle-income people to subsidize wealthy people in heavily taxed states and municipalities.
Meanwhile, Socialist Representative Alexandria Ocasio-Cortez said removing the cap would be a “gift to billionaires.” She was not among the vast majority of New York House Democrats who pushed to remove the cap imposed by the GOP.
âThere is a conversation to be had, I think, about the ceiling itself and at what level it is appropriate and where we can help families who are really deeply affected,â she said earlier this year. “We can have a conversation about politics, but it’s a bit of an extreme position, to be frank.”
Democrats last attempted to repeal the cap in 2019, when they held a solid 34-member majority in the House. Sixteen Democratic lawmakers joined Republicans in voting against it, and it was passed by 218-206, though it languished in the Republican-held Senate. The 34-vote majority Democrats once held have fallen to just eight.
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It is not clear from the budget directive what exactly the âlighteningâ of the SALT cap would be, although the Tax Foundation, a non-partisan think tank that generally prefers lower taxes, believes that repealing the deduction would cost $ 380 in the United States. billion in turnover.
While it may not be completely repealed, the cap could also be raised as part of the negotiations to adopt the spending package. The provision is already expected to expire in 2025.
Original location: Democrats prepare plan to adopt ‘SALT cap relief’ tax break for the rich