At issue is the $10,000 cap on deductions for state and local taxes paid that was included by Republicans in the Trump tax overhaul as a way to offset the revenues lost from other tax cuts in the bill. The deductions largely benefit wealthy people in high-tax blue states.The so-called SALT caucus, which consists of Republicans and Democrats from high-tax states like New York and California, have been pushing to have the cap eliminated or at least raised.
“My opinion, I think there is two opportunities. One is letting SALT just expire in 2025 … or we try and push something in using our bipartisan SALT caucus in the tax plan, but in order for us to do that, we need to pass this tax plan out of the House,” she said.
Someone familiar with the ongoing negotiations expressed to the Washington Examiner that the provision increasing the standard deduction was supposed to create more wiggle room to get the tax package out of the House. In districts with predominantly middle-class families, increasing the standard deduction can provide a lot of relief, but in other districts with wealthier residents, raising the standard deduction may not be enough to offset SALT, according to Malliotakis.
“For me I think there’s a lot of options on the table but there needs to be a good-faith negotiation to address the concerns of our constituents and our districts,” Lawler said. “Before the 2017 SALT cap, states and local jurisdictions could increase taxes without much impact to the taxpayer, incentivizing fiscally irresponsible behavior. Removing this distortion encourages more efficient behavior from state and local jurisdictions,” the aide said.