'No SALT, no deal': Vulnerable Dems threaten revolt unless $3.5T bill cuts blue-states taxes

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A cadre of vulnerable House Democrats has threatened a revolt if President Biden's $3.5 trillion social welfare package does not restore a federal income tax break that mostly benefits blue states.
The lawmakers, who represent states in the Northeast and the West with high state taxes, said on Monday they will vote against the bill unless it restores State and Local Tax, or SALT, deductions.

"I have been consistent for six months: No SALT, no deal," said Rep. Tom Suozzi, New York Democrat.

The SALT deduction allows individuals to write off certain taxes they pay to state and local governments. It once provided significant tax relief in states like New York and California, where the local tax burden is heavy.

Former President Trump's landmark tax cuts in 2017 capped the deduction to $10,000 per year. It also changed the eligibility criteria, allowing filers to deduct property taxes and state income or sales taxes, but not both.

Opponents of SALT argue that it delivers a huge federal subsidy to high-tax states and local governments.

The cut enraged lawmakers and governors from high-taxed blue states, who said it amounted to a penalty on their constituents.

"More than 50% of families in [my district] took the SALT deduction before it was capped in 2017," said Rep. Miki Sherrill, a New Jersey Democrat. "Let's keep our promises to them and families across the country who have been unfairly doubled taxed since then."

Despite the rhetoric, both the nonpartisan Tax Foundation and the liberal-leaning Brookings Institution say the SALT deduction is a giveaway to the wealthy.

Haris Alic
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