Politics Senators huddle on path forward for SALT deduction in spending bill

02:05  01 december  2021
02:05  01 december  2021 Source:   thehill.com

The single biggest provision in Biden bill in first half-decade is tax cut for wealthy

  The single biggest provision in Biden bill in first half-decade is tax cut for wealthy The most expensive item over the first half-decade of President Joe Biden’s climate and social spending legislation is a tax cut for the wealthy. © Provided by Washington Examiner The Democratic Build Back Better Act, which passed the House on Friday morning, raises the current $10,000 cap on federal tax deductions for state and local taxes to $80,000, a move that leads to a significant tax cut for high earners in states with high taxes. The provision dwarfs many of the other priorities in the legislation and was included under pressure from a vocal contingent of Democrats from high-tax blue states.

By its nature, the SALT deduction limitation affects high-earning taxpayers because it allows a deduction only for taxpayers that pay large amounts of income and real estate taxes to states and localities. Raising the cap is considered regressive in tax policy speak, and Senator Bernie Sanders (D–VT), among other progressives, objects to this. The Senate and House versions of the bill would then need to be reconciled. With so much up in the air, nothing is certain and only time will tell where this all shakes out.

The so-called SALT deduction cap, which is poised to sunset in 2026, limits the amount of state and local taxes that Americans can deduct from their federal taxes to ,000. Centrist Democrats have been pushing for months to include a full repeal in the president's .75 trillion "Build Back Better" Biden pitches revamped millionaires tax, global minimum to fund spending bill . "Though this increase in the SALT deduction cap would be less costly than full repeal, it would still cost more than almost any other part of Build Back Better with just the child care subsidies and the

A group of Senate Democrats met Tuesday to discuss how to address the state and local tax (SALT) deduction in the social spending and climate package, seeking to make progress on a key issue where Democrats have yet to reach an agreement.

Sen. Bernie Sanders (I-Vt.) speaks to reporters as he arrives to the Capitol for a vote on Wednesday, November 17, 2021. © Greg Nash Sen. Bernie Sanders (I-Vt.) speaks to reporters as he arrives to the Capitol for a vote on Wednesday, November 17, 2021.

Senators said following the meeting that they did not come to a resolution on the issue but were nonetheless upbeat about the discussions.

Sen. Jon Tester (D-Mont.) said he thinks there is a "path forward."

Sen. Bernie Sanders (I-Vt.) similarly told reporters it was a "good discussion."

Lakers-Pistons melee: LeBron James suspended one game for elbow; Isaiah Stewart two games for lashing out

  Lakers-Pistons melee: LeBron James suspended one game for elbow; Isaiah Stewart two games for lashing out Lakers F LeBron James was suspended one game for throwing an elbow at Pistons C Isaiah Stewart, who was suspended two games for trying to fight.The NBA suspended star Lakers forward LeBron James for one game for "recklessly hitting" Pistons center Isaiah Stewart on Sunday night that left his face bloodied and required eight stitches. Stewart will be suspended two games for "escalating an on-court altercation by repeatedly and aggressively pursuing" James in an unsportsmanlike manner.

When are the social spending plan and infrastructure bill going to become law? Dems say before Thanksgiving. Democratic leaders now plan to pass the infrastructure bill before they vote on the party plan to expand the social safety net. Senate Majority Whip Dick Durbin (D-Ill.) said in a brief interview they would likely vote on the social spending bill “after next week’s recess.” Remaining sticking points: Pelosi indicated members of her caucus are still debating immigration, drug pricing negotiations and climate change.

The SALT deduction is usually the main reason for itemizing. More than 95% of itemizers claimed the deduction in 2014, while 28% of all taxpayers claimed it, reports the Tax Foundation. "The SALT deduction is not only valuable to taxpayers, it also often pushes them out of standard deduction and they benefit from other deductions as well," said Lilian Faulhaber, associate professor of law at Georgetown University Law Center. But fewer taxpayers are expected to itemized going forward since the new reform nearly doubles the standard deduction . So who will pay more under the new rules?

Video: Rep. Krishnamoorthi: If Republicans don’t “act responsibly” on debt ceiling, Dems have to “act on our own” (MSNBC)

Republicans created a $10,000 cap on the SALT deduction in their 2017 tax law. The cap has long been disliked by lawmakers in high-tax states such as New York and New Jersey, who argue it punishes their states and residents. But some progressives, such as Sanders, as well as some moderate Democrats, such as Tester, have raised concerns that undoing the cap would amount to a tax cut for high-income households.

The House's version of the social-spending bill would raise the cap from $10,000 to $80,000, but many senators have raised concerns about this approach, saying it would be too beneficial for the wealthy.

Why the Senate should kill the Build Back Better bill

  Why the Senate should kill the Build Back Better bill There is no economic justification in adding trillions of dollars of spending and debt to an economy that is already in recovery. The latest Build Back Better spending and debt bill is especially foolhardy, given that the biggest threat to the economy now is runaway inflation that could flatten the economy and family finances. Democrats argued that this was all justified to reduce income inequality and, as President Biden has said umpteen times, to make the rich pay their "fair share.

The bill now heads to the President's desk to be signed into law, following hours of delays and internal debating among Democrats on Friday, including calls from Biden to persuade skeptical progressive members of the Democratic caucus. The legislation passed the Senate in August, but was stalled in the As frustration over the holdup intensified, House leadership pressed ahead with a plan to vote on the infrastructure bill and a separate rule governing debate for the social spending bill . Pelosi held firm at a news conference that the new plan will go forward and sounded confident about the prospects of passing the

The change to the SALT deduction provision came as lawmakers were making last-minute adjustments to the spending package before an expected vote Friday. House Democrats Democrats at odds over SALT changes MORE (D-N.J.), three lawmakers who pushed for SALT deduction cap changes to be included in the spending bill , praised the modified provision. "This agreement to address the cap on our State and Local Tax ( SALT ) deduction will effectively eliminate the undue burden for nearly all of the families in our districts who’ve been unfairly double taxed for the last four

Sanders and Sen. Bob Menendez (D-N.J.) earlier this month floated an alternative idea under which the cap would remain at $10,000 but there would be an exemption for households under a certain income level.

The two senators told reporters Monday that they had some disagreements over the details of a proposal. Sanders had expressed a desire for a proposal that would increase federal revenue, while Menendez wants the proposal to be revenue-neutral.

Menendez's office emphasized a desire for changes to the SALT deduction cap to be revenue-neutral following Tuesday's meeting.

"Today's meeting was a positive step as Senator Menendez continues to work to end the SALT cap nightmare for 99% of NJ families," a spokesman for Menendez said. "Any attempt to raise revenue from the SALT cap is a non-starter for the Senator as it doubles down on bad policy and makes New Jerseyans pay more than their fair share. As negotiations continue, a revenue neutral proposal on SALT is the only viable path forward."

On The Money — Powell pivots as inflation rises .
Happy Tuesday and welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. Subscribe here: thehill.com/newsletter-signup.Today's Big Deal: Federal Reserve Chair Jerome Powell says the central bank may pull back on stimulus quicker than they expected. We'll also look at how the omicron variant of the coronavirus is raising uncertainty for the global economy.But first, find out about the French flying taxis.For The Hill, we're Sylvan Lane, Naomi Jagoda and Aris Folley. Reach us at slane@thehill.com or @SylvanLane, njagoda@thehill.com or @NJagoda and afolley@thehill.com or @ArisFolley.Let's get to it.

usr: 3
This is interesting!