Senate Dems: Build Back Better Likely to Drop SALT Changes

Senate Dems: Build Back Better Likely to Drop SALT Changes U.S. Capitol U.S. Capitol. (Brendan Smialowski/AFP via Getty Images)

By Theodore Bunker | Wednesday, 26 January 2022 11:30 AM

The revised version of the Build Back Better Act will likely not include the proposed raise to the cap on state and local tax (SALT) deductions, several Senate Democrats told The Hill on Wednesday.

Although Senate Majority Leader Chuck Schumer, D-N.Y., made the proposal a top priority, multiple Senate Democrats said they can't find space for the change, noting that Republicans would argue that it primarily benefits high-income suburbanites in Democrat-controlled states.

"Yeah, I think that's dead," one Democratic senator, who was not named, told the Hill.

Another Democratic senator added that Sen. Joe Manchin, D-W.Va., has previously indicated that he wouldn't support a change to the deduction.

A group of House Democrats from New York and New Jersey last week announced in a joint statement that they wouldn't support any bill that doesn't include a raise to the $10,000 cap on SALT deductions imposed by former President Donald Trump in 2017.

"SALT remains a top priority. We support the President's agenda, and if there are any efforts that include a change in the tax code, then a SALT fix must be part of it. No SALT, no deal," Reps. Josh Gottheimer, D-N.J., Mikie Sherrill, D-N.J., and Tom Suozzi, D-N.Y., said, according to the Hill.

Howard Gleckman, an Urban-Brookings Tax Policy Center senior fellow, told the Hill that a smaller bill makes it "harder … to squeeze something in," adding that if Democrats "do put something in with SALT, it's likely to be much smaller than what they were talking about before."

He noted, "The problem that the Democrats have here is not only does SALT relief cost a lot of money, but it is extremely regressive. We looked at a number of versions of this. We looked at an $80,000 cap, we looked at a $25,000 cap, we looked at a $400,000 phaseout … and there are real significant differences, but all of them are extremely distributionally regressive. All of them largely benefit the highest-income people, no matter how you do it."