Lawmakers launch bipartisan caucus on SALT deduction

A bipartisan group of House members from high-tax states on Thursday launched a caucus focused on advocating for undoing the $10,000 limit on the state and local tax deductions (SALT), as lawmakers press to include repeal of the cap in infrastructure legislation.

“It is high time that Congress reinstates the state and local tax deduction, so we can get more dollars back into the pockets of so many struggling families, especially as we recover from this pandemic,” Rep. Josh Gottheimer (D-N.J.), one of the chairs of the caucus, said during a press conference.

The caucus has about 30 members from states such as New York, New Jersey, California and Illinois. Democratic members of the caucus include Gottheimer, and Reps. Thomas Suozzi (N.Y.) and Bill Pascrell (N.J.), who have all been outspoken on the SALT issue in recent days.

GOP lawmakers in the caucus include several first-term House members from New York and California, as well as Rep. Lee Zeldin, who recently announced that he is running for governor of New York.

“I’m very proud to fight for my Californians by joining this SALT caucus,” said Rep. Young Kim (R-Calif.), another co-chair of the caucus. 

Former President Trump’s 2017 tax cut law limited the SALT deduction in order to help offset the cost of tax cuts elsewhere in the measure. Most Republicans are supportive of the cap, saying it helps to prevent the federal tax code from subsidizing higher state taxes. They also note that most people received tax cuts under Trump’s law even in high-tax states.

But many Democrats, as well as some Republicans from high-tax states, are strongly opposed to the cap, arguing that it hurts their residents and makes it harder for their states to provide robust services.

The formation of the bipartisan SALT caucus comes as Democrats from high-tax states have been ramping up pressure on congressional leadership and the White House to include repeal of the deduction cap in forthcoming legislation based on President Biden’s infrastructure package. 

Earlier this week, nearly every Democrat in New York’s House delegation wrote a letter to House Democratic leadership saying that they “reserve the right to oppose any tax legislation” that doesn’t repeal the SALT deduction cap. Rep. Mike Levin (D-Calif.) said that Democrats in the California delegation are also working on a letter about the SALT deduction cap.

Rep. Anna Eshoo (D-Calif.) said that the issue is likely to be taken seriously during negotiations on future legislation because there’s a growing number of lawmakers who are raising it.

“Around here, the operational question is, how many votes do you have,” she said. “We already have a lot of votes on this issue, and it’s going to grow.”

Speaker Nancy Pelosi (D-Calif.) has said she’s sympathetic to the position of the lawmakers from high-tax states and would like to see reform of the SALT deduction cap included in an infrastructure bill. Still, it could be challenging to include a provision on the SALT deduction in infrastructure legislation because repealing the cap would be expensive and has been estimated to largely benefit higher-income taxpayers.

Members of the new caucus argued that non-wealthy people in their districts are impacted by the SALT deduction cap, because the cost of living is high.

“This group is going to work together to educate people about how the middle class in my district or in many of the districts here is very different from the middle class in other districts in the country,” Suozzi said.