SALT in Some GOP Reps’ Wounds

SALT in Some GOP Reps’ Wounds

Jonathan Ernst

The House GOP’s decision to push ahead with Tax Cuts 2.0 comes after a Bloomberg report published Tuesday that said they were “hitting the pause button” to consider the political risks of the package, including a permanent extension of the $10,000 cap on state and local tax deductions (SALT).

“We’re not resting on our laurels,” said House Majority Whip Steve Scalise (R-LA). “We’re seeing this great economic growth and so we’re starting to put together Tax Cuts 2.0.”

A provision to extend the SALT deduction cap would force Republican lawmakers from high-tax states such as New York and New Jersey to make a politically difficult choice: Vote for legislation that’s unpopular with their constituents or break from their party and vote against additional tax cuts.

Some lawmakers from New York and New Jersey have suggested eliminating the SALT extension from the new legislation, allowing the cap to expire. But party leaders have provided no indication that they’d be open to such a change, which could prompt other lawmakers to ask for tweaks of their own.

Extending the $10,000 cap on the deduction would raise about $318 billion over a decade, according to estimates from the Joint Committee on Taxation.

Internal GOP divisions over the tax package could come to a head when Scalise and House Ways and Means Committee Chair Kevin Brady (R-TX) brief lawmakers about it, The Hill’s Naomi Jagoda says. But, as Bloomberg notes, House Republicans have enough votes to pass the new tax package even without the backing of the 11 Republicans from high-tax states who voted against the 2017 law.

Why it matters: The new tax package has little chance of passing the Senate, where it would require Democratic support, so for now this is mostly about political messaging ahead of the midterm elections.