House Democrats to Move on Temporary ‘SALT’ Cap Increase

House Ways and Means Committee member Rep. Bill Pascrell Jr., D-N.J. (AP Photo/Susan Walsh/File)

The House Ways and Means Committee could take up legislation as early as next week that would increase a limit on state and local tax deductions that has riled Democrats from high-cost regions, according to a senior panel member.

The “SALT” bill, which has not yet been released, is still in flux, but the $10,000 deduction limit set by the Republican-backed tax code overhaul would be raised to an as-yet undetermined level for three years, according to Rep. Bill Pascrell Jr. A final figure hasn’t been decided on, the New Jersey Democrat said, describing it as “maybe $15,000 or $20,000, whatever that figure’s going to be.”

The legislation would also include elimination of a penalty against joint filers, who now have the same deduction limit of $10,000 as single filers. Under a bill introduced earlier this year by freshman Illinois Democrats Lauren Underwood and Sean Casten, who campaigned for their seats in part to help ease their constituents’ SALT cap-induced tax burdens, the cap would go to $15,000 for individuals and $30,000 for married couples.

Keeping such a limit in place would target the tax relief at middle-class households, rather than repealing it altogether, which would deliver a windfall to the well-off. For example, in 2017 on average the richest households making about $3.5 million wrote off more than $280,000 in state and local taxes, according to IRS data.

Pascrell said the “marriage penalty” fix would be temporary as well and also set for three years. The cost of the change would be offset by restoring the top marginal rate for individuals to 39.6%. That rate was cut to 37% by the 2017 tax law, but is scheduled to return to 39.6% in 2026.

After committee Democrats met in their weekly caucus Wednesday, leaders said they expect the House will vote before the end of the year on the measure.

House Ways and Means Chairman Richard E. Neal and the bill’s author, California Democrat Mike Thompson, told reporters that they want a committee markup and House vote this year. The House is currently scheduled to adjourn for the year by Dec. 20.

“I want that,” Neal said. “I really don’t think this should spill into next year, positively not.”

In an understatement, the Massachusetts Democrat allowed that other matters could impede a path to the floor. “You can see there’s a whole lot of background noise here on other issues,” he said, apparently referring to impeachment hearings and a Dec. 20 deadline to pass spending bills to avert a second government shutdown in two years.

While a SALT relief bill is unlikely to advance in the GOP-controlled Senate, House Democratic leaders have nonetheless been under pressure from freshman lawmakers and others from high-tax blue states like New Jersey, Illinois and California to move legislation. But they’ve struggled with how to structure a bill so it would comply with pay-as-you-go budget rules and not hand Republicans a talking point that they are simply trying to help their rich constituents.