Key House Republicans on Thursday discussed ways to direct an expanded state and local tax deduction to those making less than $400,000 as they seek to balance the cost of the tax break with the political needs of several lawmakers from New York and other high-tax states.
The $10,000 cap on SALT, one of the most contentious issues in the GOP debate on its giant tax bill, remained unresolved as lawmakers left Washington Thursday.
Republicans on the House tax panel discussed a series of options to direct the deduction to middle-class households, New York Representative Nicole Malliotakis told reporters. Committee members delved into options, including the overall cap level, how many years to extend it and if there should be income limits for who can claim the write-off, she said.
“It needs to be adjusted in a reasonable manner where it is targeted to the middle class,” she said, adding that the Ways and Means Committee would reconvene on the issue next week. Malliotakis represents Staten Island.
Targeting middle-class taxpayers could be accomplished through an income limit or through the size of the cap itself, which would limit the benefits going toward those with the highest property and income tax bills.
Such a SALT change could cost about $25 billion per year, Malliotakis said, but that depends on the size and duration of the cap adjustment. She said she opposes any changes to the alternative minimum tax, which could hit middle-class taxpayers.
Thursday’s discussion followed a Wednesday meeting between pro-SALT members and House Speaker Mike Johnson and Ways and Means Committee Chairman Jason Smith. Members left the meeting saying the two factions didn’t reach a deal.
An income limit would curb benefits for residents in some of the most expensive areas of the country — near New York City and Southern California — that are most concerned about the SALT deduction.
“I have made clear in no uncertain terms that I won’t support an income limit,” Representative Mike Lawler, who represents a suburban district just north of New York City, said in an interview Thursday, adding that he’s waiting to see a concrete SALT proposal from the Ways and Means Committee.
How to expand SALT — which was limited in President Donald Trump’s first-term tax bill — is among the most politically divisive issues facing Congress as lawmakers negotiate the contours of tax and spending legislation that they’re billing as their signature legislative priority for the year.
Trump met with Johnson and other key Republicans at the White House on Thursday to discuss the overall tax package, which forms the basis of the president’s legislative agenda.
“The final details are coming together, and they’re coming together rapidly, and I think we’re right on schedule,” Trump said.
The plan will renew Trump’s 2017 cuts, but Republicans face a series of tough choices as they debate which new levy reductions to include and whether to cut popular benefit programs, including Medicaid.
The deduction is an important issue to a small, but vocal, faction of House Republicans representing high-tax areas. A narrow GOP majority means that the pro-SALT members can block the bill if they view the tax changes as too meager for their constituents.
“I just don’t support that policy, but there’s gonna be 1,000 choices in this package,” Representative Chip Roy, a hardline conservative member from Texas, said. “But then again, you got to figure out how to get a deal done. So if the math adds up and we’re doing enough on the spending restraint side, and the tax policy works out, and SALT goes up a little, whatever.”
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