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Blue-state lawmakers flex muscles on state and local deductions

A bill to fully repeal the so-called SALT cap has 46 House signers, including eight Republicans

New York GOP Rep. Andrew Garbarino has seven Republican co-sponsors on his bill to fully restore the deductibility of state and local taxes paid by federal taxpayers.
New York GOP Rep. Andrew Garbarino has seven Republican co-sponsors on his bill to fully restore the deductibility of state and local taxes paid by federal taxpayers. (Bill Clark/CQ Roll Call file photo)

Lawmakers pressing to restore full federal deductions for state and local taxes are letting Speaker Kevin McCarthy know he doesn’t have the votes to extend the current $10,000 limit.

A new bill to fully repeal the so-called SALT cap has 46 House signatories, including lead sponsor Andrew Garbarino, R-N.Y., and seven other GOP representatives from blue states.

Republicans’ narrow House majority means they can lose only four GOP votes and still pass legislation if Democrats are all opposed. New Jersey Democrat Josh Gottheimer, a lead co-sponsor who is a SALT Caucus leader along with Garbarino, said at a news conference Thursday that he expects more GOP lawmakers to join the bill, sending a clear message to House leadership.

“That puts direct pressure on House Speaker McCarthy to listen to the millions of struggling middle-class families and take action to restore SALT,” Gottheimer said at the Thursday event in his district that was livestreamed on Facebook.

Republicans created the $10,000 cap on deducting payments to state and local governments when calculating federal taxes in their 2017 tax law. At the time, the package lost support from some GOP House members who represent districts in blue states like New York, New Jersey and California. Those states tend to have higher state income and property taxes, meaning the cap hits residents there harder.

Standing in front of a mound of road salt at a storage shed in Paramus, N.J., Gottheimer said that “the red states stuck it to us” in 2017 and that the bill’s supporters won’t allow an extension of the $10,000 cap past the end of 2025, when it’s currently set to expire.

The group’s proposal would scrap the limit starting this January, which would effectively restore unlimited deductions when people file their 2023 tax returns next year.

While the measure appears to have no path forward in Congress, it sends a message emphasizing the problems for Republicans in trying to take up messaging bills ahead of 2025, when many provisions of the party’s signature 2017 law lapse.

The chief bill from House Republicans to extend the 2017 law’s individual rate cuts, larger deductions as well as offsets like the $10,000 SALT cap has 94 GOP signatories, none of whom are backing Garbarino’s bill.

Along with GOP opposition, some Senate Democrats have balked at scrapping the SALT cap, pointing to how doing so would largely benefit higher-income households. SALT supporters say that in areas like the New York City suburbs where the cost of living is high, that would still include middle-class families.

“Long Islanders pay some of the highest property taxes in the country and, for the hardworking middle-class families in my district, the $10,000 cap means they are only able to deduct a fraction of what they pay from their federal income taxes,” Garbarino said in a statement. “I am talking about police officers, firefighters, nurses, teachers, and small businesses owners who are being double taxed on money that was never available to them.”

Republican co-sponsors of Garbarino’s bill include Reps. Anthony D’Esposito, Nick LaLota, Mike Lawler and Marc Molinaro of New York; Christopher H. Smith and Thomas H. Kean Jr. of New Jersey; and Young Kim of California.

New Jersey Rep. Rob Menendez is among Democratic backers and appeared with Gottheimer on Thursday. They both pointed to the bill as part of the newly relaunched SALT Caucus’ work. That group has more than 30 members, who have floated a variety of bills to chip away at the SALT cap.

Several members of the caucus weren’t among co-sponsors of Garbarino’s full repeal bill as of Thursday afternoon, including Ways and Means Republican Reps. Nicole Malliotakis of New York and Michelle Steel of California. Neither are supporters of Florida GOP Rep. Vern Buchanan’s bill to extend the 2017 tax law provisions either.

Rep. Mike Garcia, R-Calif., who isn’t on Garbarino’s bill, would go even further. He’s got a separate bill to strike the SALT cap going back to tax year 2018, the first year it was in place, giving taxpayers refunds for their lost deductions in those years as well as in future tax filings.

Rep. Katie Porter, a Democrat who’s running for Senate in California, is also absent. She has her own bill that would get rid of the SALT cap for people making less than $400,000 and extend limits for people making more, with revenue used to fund Medicare vision and hearing coverage.

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