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A dispute over Donald Trump’s 2017 tax reforms hampers Joe Biden’s $ 2 million infrastructure proposals, with a growing number of lawmakers on Capitol Hill threatening to vote against any tax plan and spending that does not reverse a key provision of Trump’s changes.
Thirty-two members of the House, both from the Democratic and Republican parties, formed a “Salt” caucus this week to meet against a federal tax deduction limit for state and local taxes that has resulted in one more bill. great for homes in states like New York, New Jersey and California.
More than a dozen New York Democratic lawmakers separately he wrote to Nancy Pelosi, Democratic Speaker of the House, who called the issue “critical.”
“We will reserve the right to oppose any tax legislation that does not include the total repeal of the Salt limitation,” they added.
Kirsten Gillibrand, the Democratic senator from New York, said this week that she “fully supported” the scrapping of the Salt cap and did not rule out voting against a bill that did not include politics and said, “We’ll see what’s going on. “
His threats carry significant weight at a time when Democrats control the House of Representatives by a margin of just six votes and the Senate is divided, between 50 and 50, between parties. Biden will need the support of both houses of Congress if he wants to push his ambitious $ 2 million infrastructure plan, which he intends to pay in large part with a corporate tax rate hike.
Pelosi, the congressional district that covers most of San Francisco, and Chuck Schumer, the top Senate Democrat representing New York, have previously indicated they are in favor of removing the limit.
But removing the threshold would leave Biden, Pelosi and Schumer open to charges of hypocrisy, as this measure would mean a tax cut for the wealthiest Americans at a time when the White House insists it focuses on the most needy. . The abolition of the limit would also entail a high cost, which would increase the price of an unprecedented spending proposal.
The Joint Congress Committee on Taxation dear last year, removing the cap in 2019 alone would have reduced federal revenue by about $ 77 billion.
Jen Psaki, a White House press secretary, noted Thursday that Biden had not included the removal of the Salt boundary in his infrastructure proposal. But he added: “We understand that there are several members who feel strongly.”
“There should be a discussion about how this would be paid for, what would be withdrawn,” he said. “Then there’s a kind of discussion about what’s most important to achieving our overall goals.”
Before Trump pushed his own radical tax reforms in 2017, families could deduct state and local property taxes from their federal income tax. But Trump limited those annual deductions to $ 10,000, in a move that affected homeowners with high state and local property taxes, such as New York, New Jersey and California.
Critics accused the former president of targeting people in “blue” states who tend to vote for Democrats; the Allies insisted that the White House should raise revenue to pay the generous tax credits of many people and businesses.
This time, the debate over deductions has spread to party lines. Just as Democrats and Republicans have lined up to oppose the limit, another group of lawmakers on both sides have said they are against removing it.
Alexandria Ocasio-Cortez, the New York progressive congresswoman, said lawmakers should not “hold hostage the infrastructure” to repeal tax changes.
“Personally, I can’t stress how much I think this is a gift to the rich,” he added.
Pat Toomey, the Republican senator from Pennsylvania, said restoring the deduction “would once again force low- and middle-income people to subsidize wealthy individuals in states and municipalities with high taxes.”
According to the Fiscal Policy Center, a joint venture of the non-partisan urban institute and the Brookings Institution, raising the limit would be a big help for the rich, as 96% of the profits will go to the top quintile of wage earners. More than half (57%) would benefit from the top 1%, according to their analyzes.
But lawmakers in Salt’s newly formed caucus insist that raising the limit would also help middle-class families.
“There is a misconception that Salt’s deduction does not help middle-class families. But in high-cost areas of life like my district, Salt actually makes a fundamental difference in helping our middle-class residents, such as teachers and police officers, who depend on this deduction to pay the ‘High cost of living in,’ said Mikie Sherrill, a member of the Democratic House of New Jersey.
Andrew Garbarino, a New York Republican, agreed.
“The Salt boundary penalizes the Long Islanders working class,” he said. “From firefighters to police officers, to teachers, nurses and small business owners, every day I get news from people about how overwhelming the Salt plug has caused them.”
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