House Republicans lack unanimous support for legislation to extend the Trump tax cuts because a chunk of GOP lawmakers is objecting to a key provision that limits state and local tax deductions.
On Monday, Rep. Vern Buchanan (R-FL) and 72 of his colleagues introduced a bill that would make permanent nearly two dozen tax provisions that were part of the Tax Cuts and Jobs Act and are set to sunset after 2025. But the Washington Examiner learned on Tuesday that some GOP lawmakers are objecting to the legislation as currently written because it extends a cap on state and local tax deductions.
The $10,000 cap on deductions for state and local taxes paid has been a contentious topic among both Democrats and Republicans in high-tax states. It was included by Republicans in the Trump tax overhaul as a way to offset the revenues lost from other tax cuts in the bill. The deductions largely benefit wealthy people in high-tax blue states. But a swath of Republicans says they will not vote for a bill that includes extending that cap.
“While there are some tax cuts and other provisions of the law that we would like to see extended, the SALT cap is not one of them,” said Rep. Andrew Garbarino (R-NY). “The Republican members of the SALT Caucus will not vote for a SALT deduction cap extension.”
HOUSE GOP LOOKS TO MAKE TRUMP TAX CUTS PERMANENT: LOWER RATES, CHILD TAX CREDIT, SALT CAP
The SALT Caucus is a group of Democratic and Republican lawmakers who have banded together during the last Congress and this new one to fight for the SALT cap to be raised or eliminated. Garbarino, who represents part of Long Island, is one of the caucus’s co-chairmen.
After last year’s midterm elections, the SALT Caucus now contains 10 Republican members. If every SALT Caucus member voted against the legislation as written and every other GOP lawmaker voted in favor, it would fail 222-212. One such new member, Rep. Mike Lawler (R-NY), told the Washington Examiner that he will not support any legislation that includes making the cap permanent.
“While I support many of the provisions of the TCJA and believe they should be permanently enacted into law, I cannot and will not support any legislation that would permanently extend the $10,000 cap on the State and Local Tax Deduction,” he said in a statement. “The cap must be lifted, and I will do everything in my power to do so, including withholding support for any legislation that would extend the cap on SALT.”
Rep. Anthony D’Esposito (R-NY) also said Tuesday that he would “forcefully oppose” any legislation that would make the SALT deduction cap permanent.
While Republicans nationwide failed to gain many seats in last year’s midterm elections, New York Republicans were an outlier and saw success, giving the SALT Caucus relatively more influence during the new congressional session.
A version of reform of the SALT cap considered in 2021 would have lowered revenues by $150 billion to $200 billion, and 90% of the tax relief would accrue to the top 20% of earners, according to an analysis from the Committee for a Responsible Federal Budget.
The legislation introduced to extend the 2017 tax cuts would also lock in lower individual income tax rates and the ability for pass-through businesses to take a 20% deduction. Pass-through businesses, not subject to the corporate income tax, are the most common type of business and include sole proprietorships, partnerships, and S corporations. The 2017 tax law also doubled the estate, or death, tax exemption. That allowed people to keep more of their inheritance before being hit by federal taxes.
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A top priority for House Republicans from a tax standpoint is stopping the myriad tax changes from expiring after 2025. Still, even if the SALT cap extension were cut and the bill passed, the proposal has little chance of becoming law with President Joe Biden in the White House, although Republicans are still making their case for doing so.
