House Republicans are trying to block members of Congress from profiting off the restoration of a proposed tax break for blue state residents.
Rep. Carol Miller introduced an amendment to President Biden’s multitrillion-dollar social welfare and climate bill that would prevent individuals or households making more than $173,999 — one dollar less than the salary for Congress members — from being eligible for the state and local tax (SALT) deduction.
Mrs. Miller, a West Virginia Republican on the tax-writing Ways and Means Committee, told The Washington Times that she wants to prevent congressional Democrats from cashing in on the tax break, which Democrats want to expand in Mr. Biden’s big bill.
“Leave it to the ‘For the People’ party to leave middle America behind so they can pass themselves an $80,000 tax break,” said Mrs. Miller, referring to the Democrats’ For The People Act that would override state election laws. “It is unacceptable that my colleagues across the aisle want to give themselves a tax benefit when American families are grappling with the highest costs to put food on the table and fill up their gas tanks.”
SALT allows individuals to write off a portion of their state and local taxes from their federal income taxes. The lucrative tax break is used by residents from predominantly Democratic coastal areas, where the state and local tax burdens are especially high.
Former President Donald Trump’s signature 2017 tax overhaul capped the deduction to $10,000 annually. At the time, Republicans and good government groups argued the tax break was a giveaway to the superwealthy.
Since the cap was put in place, moderate Democrats from the Northeastern and Western U.S. have been arguing for its repeal. The fight has mainly taken hold within the House, where a cadre of moderate Democrats have threatened to withhold their support from Mr. Biden’s social welfare bill unless it includes a fix for SALT.
“Red states put a cap on the SALT deduction to hurt us in blue states,” said Rep. Josh Gottheimer, New Jersey Democrat. “Middle-class families … need a tax cut. No SALT, no Dice!”
Mr. Gottheimer and his allies have convinced House Speaker Nancy Pelosi, California Democrat, to include a provision within the White House’s social welfare bill hiking the cap from $10,000 to $80,000. The hike would be immediate and last throughout the next decade.
Mrs. Pelosi, a California Democrat, has argued that restoring the SALT deduction will be beneficial to all taxpayers.
Nonpartisan fiscal watchdogs, including the liberal-leaning Brookings Institution, disagree.
“Households making $1 million or more a year would receive half the benefit of repealing the $10,000 federal cap on the state and local tax (SALT) deduction,” a study by the Urban-Brookings Tax Policy Center found. “Seventy percent of the benefit would go to those making $500,000 or more.”
Mrs. Miller argues that the time and effort being put into giving tax breaks to wealthy blue state millionaires shows how out of touch Democrats have become.
“Add this to the growing list of out-of-touch policies Joe Biden and Democrats want to ram through Congress for their own benefit,” she said. “They aren’t for the people, they’re for the politicians.”