WASHINGTON – The Biden administration on Thursday signaled that it's open to the restoration of the full federal deduction for state and local taxes as it works with Congress to flesh out the details of its $2.25 trillion infrastructure plan.
Asked about the so-called "SALT deduction" at her daily news briefing, White House press secretary Jen Psaki said: “If Democrats want to propose a way to eliminate SALT – which is not a revenue raiser, as you know, it would cost more money – and they want to propose a way to pay for it and they want to put that forward, we’re happy to hear their ideas."
Psaki's comment is significant because three House members, all Democrats, have threatened to withhold their support for Biden's "American Jobs Plan" unless it fully restores the SALT deduction. With a mere eight-seat House majority, Democrats can afford to lose no more than three votes on any measure for it to pass.
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“We say ‘No SALT, no deal,’ " said Rep. Tom Suozzi of Long Island as well as Reps. Josh Gottheimer and Bill Pascrell said in a statement. "The GOP passed an unfair cap of $10,000 on state and local tax (SALT) deductions to pay for their 2017 tax giveaway. Due to the GOP cap, our home states of New York and New Jersey have been crushed and residents have been leaving for other states."
Psaki's comment was just one of several recent signs that Biden's infrastructure and green jobs plan may include tax changes including the return of the full SALT deduction.
White House Chief of Staff Ron Klain told Politico Thursday that he wants to talk to lawmakers who are concerned about the SALT issue.
“We want to engage the members from that part of the country, for whom this is really a major issue,” Klain said. “We understand the concern. I want to hear from them how they would pay for this tax deduction. I want to hear (from) them how it fits into the overall package.”
Meanwhile, when asked on Thursday about bringing back the full SALT deduction, House Speaker Nancy Pelosi told reporters: “Hopefully, we can get it into the bill.”
And on a visit to Buffalo Wednesday, Senate Majority Leader Charles E. Schumer said of the Republican move to trim the SALT deduction: “It was a dagger in the heart of New York because it hurts many middle-class families here in Western New York and elsewhere, and it’s something that we want to try to get lifted.”
Asked about the odds of doing so, Schumer, a New York Democrat, said: “I think they’re getting better and better.”
Gov. Andrew M. Cuomo and other New York officials have complained for years about the 2017 Republican-passed tax overhaul that limited how much of their state and local taxes they can deduct. That change resulted in dramatically bigger federal tax bills for higher-income homeowners in states that have high state and local taxes, such as New York.
The SALT deduction will be one of several issues at play that will be of interest to New York as Congress begins fleshing out Biden's infrastructure plan.
In a Zoom call with regional reporters, White House Principal Deputy Press Secretary Karine Jean-Pierre said she doesn't expect the White House to propose particular projects for particular states to be included in the plan while Congress is at work on the measure.
But after the the infrastructure bill becomes law, "there's going to be a competitive process ... for certain projects that are going to be funded into states," Jean-Pierre said.
