It's time to put SALT on the table
Congressman Thomas Suozzi speaks during a press conference at the Landmark on Main Street in Port Washington on March 31, 2021. Credit: James Carbone
In the nearly three months since Joe Biden was sworn in as president, it’s begun to seem that, at least in the eyes of top Democrats, the nation can afford anything and everything.
Except, that is, lifting the cap on a federal deduction for state and local taxes that Americans counted on for over 100 years. The time to do so is now.
The deduction was in the tax code from the day the nation first imposed its income tax in 1913 until President Donald Trump and a Republican Congress effectively killed it in 2017. It was capped at $10,000 to help pay for a massive tax cut that still cost the nation’s coffers $1.5 trillion in revenue and mostly enriched corporations and the wealthy denizens of red states. The plan did far less for the middle class in high-cost locales like New York and New Jersey, and even wealthy blue-state residents benefited far less than their tax-bracket mates in the south and west.
Since Biden took office he’s passed a $1.9 trillion COVID-19 stimulus measure, and that came hard on the heels of trillions more in aid disbursed under Trump to deal with the pandemic. Now Biden has proposed a $2.2 trillion infrastructure bill that pays for the plan in 15 years by increasing Trump’s 21% corporate tax rate to 28%, halfway back to the 35% rate that prevailed until 2017.
Increasing the corporate tax rate is one of the ways blue-state Democrats see a path to restoring SALT deductions in their entirety — meaning no cap on the deduction for state and local taxes, which would cost $321 billion between now and 2026. In the House of Representatives, Glen Cove's Thomas Suozzi has taken the lead in organizing a growing group of moderate Democrats, who have been Biden’s most reliable supporters. And key Senate Democrats are balking at Biden’s spending plan as overly broad and they won't support a big corporate hike. With razor-thin margins in both chambers, Biden can ill afford any defections.
There is no justification for denying Long Islanders and others in the same boat the ability to deduct state and local taxes. It’s a mechanism that has allowed taxpayers to build great schools and safe communities and pay the teachers and police officers and other public workers enough to provide for their own families. And it has been part of the economic engine that created New York’s fantastic prosperity and the economic opportunities crucial in a nation where the state sends $44 billion more to Washington each year than it gets back. And now the state itself has raised taxes on its richest residents to fund its own needs, a blow deepened by the SALT cap.
The Suozzi caucus has some leverage. They want to reduce the pain of high income and school taxes. They say they won’t vote for the infrastructure bill unless it includes full restoration of SALT. They likely have the power to kill Biden's plan. And they’re right to threaten the move.
— The editorial board
