LI reps must play the long game on SALT changes

The endless high-stakes push-and-shove in Washington over state and local tax deductions has reached a stasis. Most likely, the current $10,000 limit on upper-income Long Islanders’ ability to deduct New York taxes on federal returns will last through 2025 when the relevant law expires.

For the moment, no responsible player is predicting how SALT will change when the time comes — extension, elimination, or a higher cap on deductions. That temporary status quo should not ease up public pressure to eliminate the cap outright — and restore SALT to where it was before its near-evisceration in the 2018 tax year.

Other major tax changes, also enacted during the Trump administration and largely kept under the Biden administration, also expire at the end of 2025, signaling trade-offs in future negotiations.

Long Island Reps. Anthony D’Esposito, Nick LaLota and Andrew Garbarino — all Republicans in the majority caucus of House Speaker Kevin McCarthy — are rightly aligned with blue-state Democrats looking to roll back the SALT cap. These House members and the state’s U.S. senators, Majority Leader Chuck Schumer and Kirsten Gillibrand, must keep the heat on. There will be many moving parts in future talks. Groundwork needs to be done so SALT won't get shunted aside again. Billions of New Yorkers' dollars remain at stake.

As it stands, the ill-advised 2017 cap — imposed to make up revenue sacrificed by a cut in the top tax rate for individuals from 39.6% to 37% — is falling short on collections anyway, a new report reveals. No surprise there; it was a flawed piece of legislation all along.

According to the nonpartisan Tax Policy Center, owners of businesses such as law firms and car dealerships use “workarounds” allowed in 36 states to legally dodge the cap’s effects. As a result, some 15% to 20% of the cap’s intended revenue isn’t flowing into the U.S. Treasury, the center reports.

“If you have a SALT cap, it doesn’t make any sense to say that the richest workers are basically exempt from it, but everybody else is subject to it,” the Tax Policy Center’s Leonard Burman told The Wall Street Journal. By another group’s estimate, the state workarounds would cost the Treasury $190 billion over 10 years if the cap is extended starting in 2026.

Better to just kill the limit and then negotiate how to restore the money.

The 2017 tax law was tailored to favor red states. A GOP attempt to extend the SALT cap, with House amendments to the so-called Inflation Reduction Act of 2022, was repelled. Of course, extension remains a nonstarter in the Senate for Schumer and his caucus.

The push to fully restore SALT is a top priority for the bipartisan coalition of lawmakers with constituents who are double-taxed under the cap. Whichever party controls whichever seats this year and next, affected Long Island residents will rightly clamor for change.