Trump Urges House Republicans to Plan Increase in SALT Deduction Cap
TL/DR –
President-elect Donald Trump has requested a plan from House Republicans for increasing the state and local tax (SALT) deduction which underwent a $10,000 cap in his 2017 tax law. The cap was widely criticized by lawmakers from high-tax states and some Republicans have suggested raising the deduction limit to $200,000. However, finding a consensus among Republicans may be challenging as many are skeptical of providing tax relief for high-income residents in states governed by Democrats, and the cost of lifting the cap is considerable.
Donald Trump Supports Undoing Major Tax Law Provision
President-elect Donald Trump reaffirmed backing for revamping a key provision of his 2017 tax law on Saturday. He urged House Republicans at his Florida estate to devise a strategy for increasing state and local tax (SALT) deductions, said four lawmakers present at the meeting.
The Republicans had capped the SALT deduction at $10,000 during Trump’s first term to aid funding the extensive 2017 tax law. This move unsettled lawmakers from high-tax states such as New York and New Jersey, prompting them to pledge to reinstate this significant deduction for their constituents.
The enduring endeavour to restore or at least enhance this deduction received a lift during Trump’s presidential campaign when he pledged to “get SALT back.” However, House Republicans advocating for the cap increase are yet to reach consensus on the details.
Discussions include increasing the deduction cap up to $200,000, or a lesser uplift paired with incremental hikes over time, adjusting for inflation. The current $10,000 cap is applicable to both individuals and married couples, with consensus among the group that couples should have a larger deduction.
Debate Over SALT Deduction Cap Continues
At the Saturday meeting, House Republicans from New York, New Jersey, and California presented various suggestions to Trump about addressing the cap issue, according to attendees. Ideas included convincing local leaders to halt tax increases in return for a higher deduction for their residents.
“Maybe we increase the deduction, but perhaps the deduction goes even higher if your state freezes or lowers the tax rate,” proposed Representative Nicole Malliotakis, a New York Republican who attended the meeting.
Trump listened to the House Republicans and encouraged them to reach a consensus. Any proposed changes would require almost unanimous support from other congressional Republicans who remain wary of offering tax relief to residents of Democrat-governed states.
Removing the cap on the deduction is costly, and Republicans wrestle with the astronomical cost of the tax bill they aim to pass this year. Legislators have mulled over limiting businesses’ ability to deduct state and local taxes from their federal bills to offset any changes’ expenses.
“While not unlimited, we still need a cap,” remarked Representative Jeff Van Drew, a meeting attendee from New Jersey. “We need to find that sweet spot.”
—
Read More US Political News