The second most expensive provision in the reconciliation bill at the center of Democratic negotiations on the Hill might wind up not being more assistance for the poor but rather a massive tax break for the wealthy. According to multiple sources, Democrats are trying to insert a five-year removal of the state and local tax deduction, with Punchbowl News claiming it may be retroactive. If so, it would cost $88 billion per year, nearly three times the amount allocated for climate change and the Affordable Care Act.
Top Democrats have already angered liberals by scaling down the price of the reconciliation bill by half, culminating in a patchwork omnibus of temporary spending and devoid of a key promise: paid parental leave. Issuing a removal of the SALT deduction, even temporarily, ought to make the bill a nonstarter for the Left.
The overwhelming majority of the SALT deduction, which was capped at $10,000 under the Trump administration’s Tax Cuts and Jobs Act, goes to the top 1% of earners, with just 4% going to the bottom 80% of earners. Eliminating the deduction entirely, cap and all, would net $25 billion annually. That would be enough to fund more than half of President Joe Biden’s “free” college plan and the entirety of the president’s nuclear energy restoration plan indefinitely. And yet, after years of screaming about taxing the rich, Democrats may just go all-in on giving the 1% a tax break.
West Virginia’s Democratic Sen. Joe Manchin already assured the reconciliation bill would remain in legislative purgatory when, during a press conference on Monday, he demanded a “score” of bill costs before voting for it. If so-called “moderates” are now putting liberal poison pills into the bill, it’s as clear a sign as imaginable that House and Senate leadership see little way forward in turning this bill into a law.
