House Speaker Nancy Pelosi said she supports including a provision that would reduce taxes for some wealthy homeowners in a massive infrastructure measure Congress will consider in the coming months.
“Hopefully, we can get it into the bill,” the California Democrat told reporters at a virtual press conference Thursday.
A group of Democrats from high-tax states says it won’t back Biden’s infrastructure plan unless it repeals a $10,000 cap on deductions for property taxes that was imposed under the Trump-era tax law.
The State and Local Tax, or SALT, deduction cap affected millions of homeowners in high-tax blue states. The revenue was used to fund part of the overall 2017 tax cut bill, which reduced corporate and individual rates.
Pelosi called the cap “mean-spirited” and “a political action on the part of the Republicans.”
California is among the states impacted by the SALT cap, along with New York, New Jersey, and other places with high property taxes and expensive real estate.
Republicans immediately attacked the idea of eliminating the cap.
“Restoring the SALT deduction would once again force low- and middle-income people to subsidize wealthy individuals in high-tax states and municipalities,” Sen. Pat Toomey, a Pennsylvania Republican, said.
Pelosi, however, may have little choice but to try to repeal the SALT cap in the infrastructure bill.
A group of House Democrats issued a statement this week threatening to vote against the infrastructure bill unless the SALT deduction cap is eliminated.
Biden’s infrastructure proposal would raise corporate tax rates, and he is also expected at some point to hike takes on household incomes above $400,000 and expand the estate and capital gains taxes.
“We will not accept any changes to the tax code that do not restore the SALT deduction,” Reps. Bill Pascrell and Josh Gottheimer, both of New Jersey, and Tom Suozzi, of New York, said in a statement.
Democrats control a mere three-seat majority and can’t pass the infrastructure measure with a trio of defections.
“I’m sympathetic to their position,” Pelosi said. “I will withhold any comment about whether you can vote for a bill or not until you see what the bill is.“
Republicans have criticized past efforts by the Democrats to repeal the SALT cap. They say removing the cap bails out high-tax states and wealthy homeowners and should remain in place.
The Tax Policy Center determined “few middle-income households would benefit” from eliminating the cap.
