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New York Rep. Tom Suozzi speaks during a news conference announcing the State and Local Taxes (SALT) Caucus outside the U.S. Capitol, April 15, 2021.
Photo:
Sarah Silbiger/Bloomberg News
Remember how House Democrats from New Jersey and New York vowed to oppose a tax-and-spending bill that didn’t lift the $10,000 deduction limit for state-and-local taxes? Read their lips. “No SALT, no deal,” New York Rep.
Tom Suozzi
said. On Friday all of them broke their pledge as the House bill passed on a party-line 220-207 vote.
The SALT caucus explanations are amusing in their misdirection. “This bill doesn’t raise taxes one penny on families or small businesses in my district,” New Jersey Rep.
Josh Gottheimer
said. “We also stopped those in red states trying to further gut SALT, and those who wanted to raise taxes on individuals and small businesses in Jersey.”
Mr. Gottheimer and his fellow SALTers didn’t stop anything. They rubber-stamped the Senate deal that Majority Leader
Chuck Schumer
negotiated with West Virginia Sen.
Joe Manchin
with fine-tuning by Arizona Sen.
Kyrsten Sinema.
As comic is Mr. Suozzi’s rationalization. “The Inflation Reduction Act does not increase personal income taxes, and ‘No SALT, no deal’ does not apply,” he said. “If any change is proposed in the personal income tax rate, I will insist that we restore the state and local tax deduction.” He didn’t specify this condition in his pledge last September.
Note that his new line in the sand refers to raising personal income tax rates. He must know that the bill’s $80 billion in new money for the IRS will result in more taxpayers getting dunned and paying more taxes.
Congress’s Joint Committee on Taxation estimates that 78% to 90% of the money the IRS would raise from supposedly underreported income would likely come from taxpayers making less than $200,000 a year. Only 4% to 9% would come from those earning more than $500,000. That’s in part because the audits will target pass-through entities that include many small businesses.
The failure to change the $10,000 SALT deduction limit in this Congress means it’s probably here to stay at least through 2025 when it is set to expire. Republicans won’t change it if they retake the House or Senate in November. This means high-tax states are likely to see a further exodus of high earners to low-tax Arizona, Florida or Tennessee.
Speaker
Nancy Pelosi
owes her majority to the SALT Democrats, many of whom ran and won their seats on a promise to repeal the 2017 GOP tax reform’s deduction limit. But it’s no surprise that these House Democrats, including New Jersey’s
Mikie Sherrill
and
Tom Malinowski,
ultimately rolled over and followed the Speaker’s orders. They always do.
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Appeared in the August 16, 2022, print edition.
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