Blue state Republicans urge governors to cut taxes amid SALT debate

House Majority Leader Kevin McCarthy (R-Calif.) and Rep. Tom Reed (R-N.Y.) on Tuesday urged their governors to lower their states’ taxes, amid a debate in Congress over the fate of the state and local tax (SALT) deduction.

“There’s no reason that tax reform shouldn’t be a federal and state project,” McCarthy said on a call with reporters.

The tax framework Republicans released in September would repeal the SALT deduction, drawing concern from lawmakers on both sides of the aisle in high-tax states such as New York, New Jersey and California.

The Democratic governors of New York and California, Andrew Cuomo and Jerry Brown, have also spoken out against repealing the SALT deduction and have sought to put pressure on GOP House members from their states.

McCarthy and Reed sought to push back against their states’ governors, with McCarthy blasting a gas-tax raise in California that takes effect on Wednesday. They also argued that their states would benefit from the overall tax bill because it would provide a boost to the economy, increase the standard deduction and simplify the tax code.

“This is a win for everyone, including Californians and New Yorkers,” McCarthy said.

Blue state Republicans have been working with leadership to find a compromise on SALT, and House Ways and Means Committee Chairman Kevin Brady (R-Texas) said that the tax bill being released Wednesday will include a deduction for property taxes. Under current law, taxpayers can deduct their property taxes as well as either their state and local income taxes or their sales taxes.

Reed said that the property-tax deduction idea is “gaining traction.” He added that “property taxes are very regressive” so preserving that preference would go a long way to helping people’s needs in high-tax states.