Almost as quickly as President Trump mused about lifting the cap on state and local tax deductions included in the 2017 tax overhaul that he signed into law, a key Republican lawmaker said it won’t happen.
Trump told a group of regional reporters on Wednesday morning that he was open to raising the $10,000 limit on federal deductions for state and local taxes, or SALT, according to the Sacramento Bee. Raising the cap would amount to a tax cut for some high-earning households, especially in states with high taxes.
“There are some people from New York who have been speaking to me about doing something about that, about changing things,” Trump said, according to the Bee. “I’d be open to talking about it.”
But Sen. Chuck Grassley R-Iowa, the chairman of the Senate committee charged with writing tax laws, on Thursday dismissed the possibility of lifting the cap.
“The Senate Finance Committee won’t be revisiting the SALT deduction reforms made in the Tax Cuts and Jobs Act under Chairman Grassley’s leadership,” said a spokesman for the committee. “The SALT deduction is a federal subsidy for states to raise taxes on their residents without political consequence. The answer to the problem is for states to lower their taxes instead of insisting that taxpayers from lower-tax states subsidize their profligate spending.”
The SALT deduction primarily applies to property and income taxes. The new cap raises about $62 billion per year, according to Congress’s official estimate. Democrats criticized Republicans over the fact that the tax overhaul added to the deficit. But Democrats, and a handful of congressional Republicans, from states with higher taxes like California, New York, and New Jersey, have pushed for a repeal of the $10,000 cap, which would expand the deficit.
