Senate Democrats are trying to repeal an IRS tax rule that prohibits a "workaround" to the so-called SALT regulation, which their leader calls a “dagger to the heart” of middle-class Long Islanders.
SALT is designed to keep people from exceeding the $10,000 limit on state and local tax deductions, limiting the amount they can write off. It was passed as part of the 2017 GOP tax overhaul.
Sen. Chuck Schumer, the Senate minority leader, is pushing to undo an IRS rule from June that prohibits states from creating charitable funds that taxpayers can contribute to in exchange for a state tax credit. He is hoping to force a vote on the issue in the Senate on Wednesday.
The “workaround” gave residents in some states a way to get around the limit on the SALT deductions.
SALT is “a dagger to the heart of the middle class on Long Island” that resulted in many people paying thousands more in taxes, Schumer said.
"Probably nothing in the tax law has done more to hurt middle-class folks than this,” he added.
Schumer plays to employ a rarely used procedural mechanism called the Congressional Review Act, which permits the minority leader to bring a bill to the floor for a vote. Typically, the Senate majority leader does so.
Under the CRA, a bill needs a simple majority — 51 votes — to pass. Schumer said Tuesday that he has 46 committed votes, and that 7 to 10 senators are undecided.
“We’re neck and neck, darn close, and I hope we can win it tomorrow,” Schumer said.
House Speaker Nancy Pelosi (D-Calif.) has said the House will pass the legislation if the Senate does, Schumer said.
It is unclear what President Donald Trump would do. A two-thirds vote in each chamber would be required to override a potential veto.
“My guess is that if it passes the House and Senate, he will sign it,” Schumer said.
Trump in the past has indicated a willingness to alter the regulation.
The office of Sen. Mitch McConnell (R-Ky.), the majority leader of the Senate, did not immediately respond to a request for comment.
High-tax states with affluent suburbs that were especially hard hit by the SALT regulation include New York, New Jersey, Massachusetts, Pennsylvania and California. Most of the states impacted are Democrat-run.
The average property tax bills were $11,708 in Nassau and $9,472 in Suffolk in 2018, according to an analysis by Attom Data Solutions, a California-based company that tracks real estate data.
The regulation was among 600 changes in the tax code that were implemented in the 2017 overhaul, with varying results for taxpayers. Some got more cash back, but many others got only a sliver of what they used to receive or even ended up owing the federal government thousands of dollars.