The Politics of SALT

(Joshua Roberts/Reuters)

Before skipping town on Thursday afternoon, the House of Representatives passed a bill to lift the $10,000 cap on state and local income taxes (SALT) that may be deducted from income for federal tax purposes.

The cap, which was imposed with the passage of the 2017 Tax Cuts and Jobs Act, would be raised in 2019 and eliminated in 2020 and 2021. The bill would also raise the top tax rate from 37 percent to 39.6 percent for six years in order to pay for two years of eliminating the cap.

The measure passed 218–206, but there were more Democratic defectors than GOP supporters. The five Republicans who supported it were all from high-tax districts in New York, New Jersey, or Pennsylvania, while the 16 Democrats mostly represented states with a low cost of living (such as Oklahoma or Utah) or states that don’t levy an income tax (such as Nevada or New Hampshire). A few staunch left-wingers, including Alexandria Ocasio-Cortez of New York and Mark Pocan of Wisconsin, also opposed the measure. 

The bill won’t go anywhere in the Republican Senate in 2020, and the number of Democratic defections suggest that whatever SALT relief a unified Democratic Congress might pass in the future would be more limited than what the House passed on Thursday.

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