WASHINGTON — An influential group of five House Republicans from high-tax states is threatening to delay a major tax package that is a top priority for the president-elect Donald Trump Unless the amount their constituents can deduct from their federal income taxes is significantly increased to reflect the state and local taxes paid.
As negotiations get underway on a major tax cut bill, they’re also drawing a firm line: Merely doubling the maximum allowable deduction to $20,000 from the current cap of $10,000 won’t be enough, they say.
“$20,000 is just not possible,” New York Rep. Nick LaLota told CNBC. “It’s almost laughable. It’s too low to win our votes.”
LaLotta was one of 16 members of the Congressional State and Local Tax (SALT) Caucus who recently attended a meeting held by Trump at his Florida resort Mar-a-Lago. LaLotta and his fellow New York Republicans said Trump was there to promise lawmakers he would support their efforts to raise the SALT cap and told them to give him a number back to ensure they supported his broader tax package.
The group plans to use House Republicans’ slim four-seat majority to increase their influence.
Specifically, LaLotta is part of a group of five Republican House members who plan to unite to oppose any broader Trump tax cut plan unless it contains significant changes to the current SALT cap provisions.
Reps. Mike Lawler of New York, Tom Kean Jr. of New Jersey and Young Kim of California, according to LaLotta and Garbarino ) also belongs to this group.
Rep. Mike Lawler (R-NY) speaks to reporters before voting to pass the American Relief Act on Capitol Hill in Washington, U.S., on December 19, 2024.
Anna Roseladen | Reuters
Under the current makeup of the House, Republican Speaker Mike Johnson of Louisiana only needs to lose two Republican votes to still pass legislation along party lines. As a five-vote bloc, these SALT Republicans can effectively veto the tax cut bill that is expected to be Trump’s top legislative priority.
A spokesman for Johnson did not respond to a request for comment on SALT Group’s request.
While the larger SALT caucus has secured Trump’s support for raising the SALT cap, they still need to win over hundreds of fellow Republicans who oppose lifting the cap.
One of the most common objections to raising the SALT cap above $10,000 is that the benefits of a higher cap would primarily accrue to wealthier Americans. Another reason is that lifting the current restrictions could add billions to the cost of any tax bill, depending on how it is structured.
The Institute on Taxation and Economic Policy estimates that households in the top 20% of income groups will disproportionate benefits Any effort to increase the maximum deduction allowed for state and local taxes. That’s because these households are more likely to pay higher state taxes and owe more in federal income taxes.
Garbarino said that while his constituents may have higher incomes than the rest of the country, those families are middle class amid the high cost of living in their areas.
Congressman Andrew Garbarino stresses the importance of cybersecurity on February 21, 2024 in Babylon, New York.
Howard Schnapp | Newsday | Getty Images
“My area is not very wealthy,” he told CNBC. “I’m mostly on the South Shore of Long Island, mostly police officers, firefighters, teachers, other blue-collar workers, union people from New York City. They were all hurt when this policy was put in place in 2017, and we’re looking to right this wrong.” .
LaLotta, Garbarino and Rep. Nicole Malliotakis said the broader SALT caucus has yet to come up with what they think the cap should be and that they are poring over the data to find one that would ensure benefits for the middle class. proposal.
LaLotta said he prefers both options. One is that Congress could raise the cap to an as-yet-undetermined amount and then allow joint filers to deduct twice that amount.
Alternatively, Congress could eliminate the cap entirely but limit the deduction to households with incomes below a certain threshold.
