Right now GOP senators are saying "no" to SALT, the federal deduction for State and Local Income Taxes.
So that means the House-proposed increase for SALT has emerged in a key point of division as the two Republican-led chambers try to find common ground on a bill that would enact much of President Donald Trump’s “America First” agenda.
A plan to push the cap on the deduction from $10,000 to $40,000 was birthed by House Republicans from New York, a high-taxed blue state.
Critics see the increase as the rest of America pitching in to help pay the income tax burden placed by the State of New York on its citizens.
The average state income tax across the country is 4-5% compared to almost 6% in New York.
The House narrowly passed its version of the bill with a 215-214 count on May 22.
A Senate version of the "Big Beautiful Bill" passed its Finance Committee Monday. The SALT cap return to $10,000 stands out among other tweaks that include deeper Medicaid cuts, including new work requirements for parents of teens, and a tax credit increase to $6,000 for seniors.
The next step is a full floor vote which Senate Majority Leader John Thune hopes will take place before the Fourth of July holiday break.
It was a chore for House Republicans to get the bill out the door of their chamber. Now some are saying they can’t support the Senate’s changes.
“Look, I'm hopeful that at the end, we'll wind up with a product that every Republican in the House and Senate can vote for. We were close in the House. That's really what it took to get it out of the House to the Senate,” Rep. Warren Davidson (R-Ohio) said on Washington Watch Tuesday.
Davidson told show host Tony Perkins the $40,000 SALT cap was the work of five House Republicans.
There were six who spoke with Trump at Mar-a-Lago in January. Representatives from New York – Mike Lawler, Nick LaLota, Nicole Malliotakis and Andrew Garbarino – were prominent in the discussions along with Tom Kean Jr., of New Jersey and Kim Young of California.
“We hear some House members saying, ‘Well, I can't vote for what the Senate's talking about.’ A lot of this comes down to something most Americans don't even know about … state and local tax deductions. This is a way for most of the country to subsidize high-tax states like New York, where they get tax deductions,” Davidson said.
SALT holdouts ‘out-negotiating’ the rest
It’s a small group that’s holding a lot of political power right now – and also abusing that power, said Davidson, noting the different mile markers on the road to a $40,000 deduction that doesn’t benefit all Americans.
“I mean, last Congress, they said they were content with $20,000. The Ways and Means Committee opened at $30,000 and thought they would be able to get their vote,” he said.
It’s a bold play by blue-state Republicans as the national debt stands at more than $36 trillion.
“I think the reality is these guys have kind of abused it. It's a very expensive provision in over $300 billion in deficit addition because we're subsidizing these guys. So in a way, they're out-negotiating everyone else and holding us hostage.”
