Two Democrats Propose Beyond Biden’s SALT alternative

Two House Democrats have proposed a new plan that would offer a generous state and local tax deduction. In keeping with President Joe Biden’s rest of his economic agenda, this is the latest in a long line of proposals that have been stymied.

Reps. Tom Malinowski of New Jersey and Katie Porter of California introduced the latest SALT deduction bill this week, which would cover taxpayers making less than $400,000 a year with a $10,000 limit and those earning more than $400,000 a year with a $60,000 limit. Each additional $100,000 in earnings would result in a $10,000 reduction of the cap, which would phase out at earnings more than $1 million.

Furthermore, anyone claiming the SALT deduction must certify that their total assets do not exceed $1 billion.

The $10,000 limit had been part of the 2017 tax overhaul and will expire at the end of 2025. The lawmakers claim their plan will raise $150.9 billion over a decade if some taxpayers keep to it. In fact, that could fund Medicare vision and hearing benefits, which are important priorities for many progressives.

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Meanwhile, the Congress is unlikely to take up the SALT plan anytime soon. After Senator Joe Manchin of Virginia said he could not support many of the spending programs in Biden’s Build Back Better agenda, the legislation has been stalled in the Senate since December. While senators sought to refine a version of the bill that passed the House last year, expanding the SALT deduction was a sticking point.

Another Malinowski and Porter proposal suggested that the SALT cap be raised to $80,000 in the House version. Legislators from high-tax states, such as New York and New Jersey, with SALT relief of particular value, have said they would not back Biden’s economic agenda without SALT relief.

Since Democrats regained control of Congress, they have sought to expand the deduction. Tax breaks, however, have caused a rift within the Democratic Party because they are mostly claimed by high income households, which many Democrats say should pay more in taxes.

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