Democrats launch new bid to overturn SALT cap, raise top tax rate
The bill seeks a total repeal of the SALT cap in 2020 and 2021.
House Democrats are pursuing a new effort this week to overturn the $10,000 cap on state and local tax (SALT) deductions, enacted as part of the 2017 tax reform law – the Tax Cuts and Jobs Act.
This week, the House Ways and Means Committee is expected to take up a new bill – unveiled Monday night – under which the Democrats are pursuing a repeal of the provision in 2020 and 2021. In the meantime, the cap for married couples would be doubled to $20,000 in 2019.
The changes would be paid for by raising the top income tax rate on the wealthiest individuals to 39.6 percent, from 37 percent, which would restore it to pre-Tax Cuts and Jobs Act levels. Further, it would lower the income threshold for people who would be exposed to the top rate. Both of those changes would stay in effect through 2025.
Many provisions of the Tax Cuts and Jobs Act – including the SALT cap – are scheduled to sunset, or expire, in 2025. Part of the Tax Cuts 2.0 push being pursued by Republicans, however, aims to make some of the measures permanent.
NEW YORK, HIGH-TAX STATES FILE APPEAL OVER SALT RULING
House Ways and Means Committee Chairman Richard Neal, D-Mass., speaks at a news conference on Capitol Hill in Washington, Tuesday, Dec. 10, 2019, on Capitol Hill in Washington. (AP Photo/Susan Walsh)
The legislation would raise an estimated $6.2 billion, according to an analysis released by the Joint Committee on Taxation.
According to one of the bill’s sponsors, New Jersey Rep. Bill Pascrell, at least 47 House lawmakers have already signed onto the bill as co-sponsors. Pascrell called the SALT cap a "punch in the gut" to communities across the U.S.
High-tax states have sued to have the SALT cap overturned – an effort that has so far wrought no return. A judge dismissed a lawsuit filed by New York, New Jersey, Connecticut and Maryland earlier this year. The four states filed a notice of appeal late last month.
Stamford, Connecticut
HIGH-TAX STATE EXODUS SEEN ACCELERATING AS CONTROVERSIAL SALT CAP MAY BE HERE TO STAY
New York Attorney General Letitia James said the cap is expected to cost New York's taxpayers more than $100 billion, as the wealthy flee to lower-tax havens, like Florida. President Trump, for example, is a lifelong New Yorker who recently announced that he changed his domicile to Palm Beach, Florida.
The Ways and Means Committee is expected to vote on the bill on Wednesday. Time is running thin, however, before Congress is on recess for the holidays. Lawmakers in the chamber also will be dealing with impeachment proceedings, after the Democrats introduced two impeachment articles against Trump on Tuesday.
The bill also has little chance of passing the Republican-controlled Senate, if it is even taken up.
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