WASHINGTON — A proposal to lift the cap at least partially on state and local tax deductions in federal tax filings is included in a draft outline of the budget resolution that will be offered this summer by Senate Budget Committee Chairman Bernie Sanders.
The draft outline, which Newsday obtained Tuesday, includes $120 billion for changes to the $10,000 cap on deductions for state and local taxes, or SALT, without details. But that’s enough for a full repeal for a year or two or an increase in the cap for the next five years.
Even though the outline does not spell out how its item on the SALT cap would work, its presence in Sanders’ proposal puts the issue on the table for debate when his $6 trillion plan hits the Senate and what he hopes will be its approval in July.
"It’s a very positive development," said Rep. Tom Suozzi (D-Glen Cove), who is leading a campaign against the SALT cap and will hold a news conference with representatives of labor unions and other House lawmakers on Wednesday.
The outline shows a side-by-side comparison of Biden’s $4.4 trillion plan for the budget, which doesn’t mention SALT, to Sanders’s ambitious $6 trillion plan, which does include it. Sanders’ budget proposal will include instructions for a process to allow Democrats to pass the measure without Republican votes.
White House Press Secretary Jen Psaki said it is up to Congress to decide how to pay for the $80 billion or so a year cost of allowing homeowners to deduct SALT taxes.
Suozzi and Senate Majority Leader Chuck Schumer (D-N.Y.) sponsor the same bill in their respective chambers to repeal the SALT cap, at a cost of $385 billion through 2026. Republicans added the cap in their 2017 tax act to pay for lowering the top individual rate.
Repealing the SALT cap ranks as a priority for many lawmakers from high-cost high-tax states such as New York, New Jersey, California, Maryland and Illinois.
With a vow of "no SALT, no deal," Suozzi and more than 20 House members said they would vote against any budget bill that involves taxes that doesn’t lift the SALT cap.
But Republican leaders object to it, and Rep. Alexandria Ocasio-Cortez and other Democrats on the left oppose it because they say it primarily helps the wealthy.
Sanders' inclusion of the SALT cap in his proposal comes as something of a surprise. Last month, Sanders said repealing it would send a "terrible, terrible message" and said if you’re fighting for working families "you can’t be on the side of the wealthy and the powerful."
But Schumer, who has a good relationship with Sanders, champions the repeal and promises to fight for it. Recently, Schumer backed Sanders’ proposal to expand Medicare to cover dental, vision and hearing — at a cost of nearly $300 billion.
"Double taxing hardworking homeowners is completely unfair, which is why I am fighting to restore the SALT deduction that was spitefully taken from Long islanders by the former president," Schumer said in a statement to Newsday.