The state and local tax (SALT) deduction cap will be eliminated for five years as part of the Build Back Better social spending package, according to multiple reports.
“Great news! Here come tax cuts for New Jersey families! Reinstating the State and Local Tax (SALT) deduction will be in the final legislative package. Now, we need to get it to the floor for a vote,” Democratic New Jersey Rep. Josh Gottheimer tweeted. Gottheimer and other members of his state’s delegation had pledged to oppose any reconciliation agreement that did not fully repeal the cap, set at $10,000 by the 2017 Tax Cuts and Jobs Act (TCJA). Senate Majority Leader Chuck Schumer also supports eliminating the cap.
Great news! Here come tax cuts for New Jersey families!
Reinstating the State and Local Tax (SALT) deduction will be in the final legislative package. Now, we need to get it to the floor for a vote.
We’re going to get this done.
— Rep Josh Gottheimer (@RepJoshG) November 2, 2021
The SALT provision allows Americans to deduct already-paid state and local taxes from their federal tax burden. As a result, the main beneficiaries tend to be wealthier residents of blue states and suburbs.
Eliminating the cap would constitute a $475 billion tax cut, with $400 billion of the cash accruing to some of the wealthiest Americans, according to the Committee for a Responsible Federal Budget. It would be the costliest provision in the entire Build Back Better package.
The new SALT deduction will apply retroactively to income taxed between 2021-2025, and the $10,000 cap will be reinstated from 2026-2031, Politico reported. The TCJA instituted the cap for 2018-2025.
Left-wing members oppose eliminating the cap, creating another roadblock to a deal. (RELATED: Sen. Sanders Rips One Of Democrats’ Proposed Tax Cuts: ‘A Terrible, Terrible Message’)
“At a time of massive income and wealth inequality, the last thing we should be doing is giving more tax breaks to the very rich,” Independent Vermont Sen. Bernie Sanders tweeted, although he did allow for a compromise that would “protect the middle class in high tax states.”
At a time of massive income and wealth inequality, the last thing we should be doing is giving more tax breaks to the very rich. Democrats campaigned and won on an agenda that demands that the very wealthy finally pay their fair share, not one that gives them more tax breaks.
— Bernie Sanders (@SenSanders) November 2, 2021
Gottheimer, fellow New Jersey Democrat Mikie Sherrill and Democratic New York Rep. Tom Suozzi are adamant in their support for the provision.
“No SALT, no deal,” they said in a Tuesday statement.