Republican from crucial blue state finds Senate's local tax deduction proposal acceptable, deems it a beneficial arrangement.
Raw and Real: A Glimpse into the SALT Deduction Saga in the US Senate
In an exclusive chat with our website Live, Sen. Deb Fischer, R-Neb., dishes the latest on President Trump's 'monumental tax bill.'
According to Rep. Mike Lawler, R-N.Y., he's glad about the tax provision in the Senate's version of the bill, despite tense negotiations over certain pass-through business deductions. He expresses satisfaction that they managed to keep House's Bill language intact, resulting in a fourfold increase in state and local tax (SALT) deduction caps.
"We were able to solve our differences regarding pass-through businesses and achieve a 4x increase on SALT deduction caps," Lawler said, adding that they fought hard to protect these deductions as they primarily benefit high-cost-of-living areas, such as big cities and their suburbs.
Lawler reveals that negotiations reduced the SALT deduction benefit window to five years instead of ten. However, he remains optimistic about the impact, stating, "People will immediately be able to deduct them to $40,000, which is a massive win."
The SALT deduction is not new; it was introduced to provide relief for high-tax states, primarily blue cities and suburbs. The Tax Cuts and Jobs Act (TCJA) in 2017 introduced a cap on SALT deductions at $10,000, a limit that the House's bill raised to $40,000 for ten years, with households earning up to $500,000 eligible for the full deduction[1].
Meanwhile, despite the Senate's best efforts to limit the SALT deduction language, Lawler claims they managed to keep it. Blue state Republicans, mainly those from New York and California, have been vocal about lifting the cap, arguing it's necessary to subsidize lower-tax states with less revenue generation[3].
However, Republican representatives from more GOP-leaning states dispute the notion, claiming that high-tax Democratic states are rewarded through SALT deductions for their own questionable policies[2].
The Senate is set to begin contemplating the bill on the floor later this afternoon, with a final vote expected early Sunday morning or later[4]. Stay tuned for more updates as the legislative process unfolds.
Elizabeth Elkind, our politics reporter, leads coverage of the House of Representatives. Follow her on Twitter at @liz_elkind and send tips to [email protected]
[1] According to the enrichment data, the House's bill proposed raising the cap to $40,000 for 10 years, while the Senate bill currently proposes a 5-year benefit window, but with a potential phase-down mechanism in place for taxpayers with incomes over $500,000.
[2] The enrichment data suggests that the broader Senate Finance Committee bill includes the SALT cap increase as part of a reconciliation package aimed at extending and modifying the TCJA beyond its scheduled expiration in 2025. The bill aims to prevent tax increases and includes various other tax provisions affecting federal revenue and economic growth.
[3] Enrichment data states that NY and CA Representatives argue that lifting the SALT deduction cap is crucial to counterbalance the high tax rates in their states, which subsidize their neighbors with lower tax rates.
[4] The enrichment data indicates that the Senate aims to begin considering the legislation on the floor late afternoon on Saturday, with the final vote potentially occurring early in the morning on Sunday or later, considering potential changes to the bill.
- The SALT deduction, originally designed to alleviate high taxes in blue cities and suburbs, has been a hot topic in the ongoing discussions around the tax bill, causing tension between states with high and low tax rates.
- Negotiations between Republican representatives have resulted in a fourfold increase in the SALT deduction caps, despite a reduction in the benefit window to five years in the Senate's bill.
- High-cost-of-living areas, such as big cities and their suburbs, primarily benefit from the SALT deductions, but the fairness of this subsidization is under debate among GOP representatives from more conservative states.
- The Senate is anticipated to start contemplating the tax bill later this afternoon, and a final vote is expected either early Sunday morning or later. However, the legislative process unfolds, the SALT deduction remains a key component of finance and policy-and-legislation discussions.
