House Republicans recently presented the legislative text of their extensive tax proposal aimed at supporting President Donald Trump’s agenda, but internal disagreements persist regarding the cap on the state and local tax (SALT) deduction.
Speaker Mike Johnson organized a video call with members from the tax-writing Ways and Means Committee and the SALT Caucus, which consists of Republicans from high-tax states advocating for a significant increase in the SALT cap, which currently stands at $10,000. The discussed proposal includes a cap increase to $30,000 but faces resistance from several lawmakers within the SALT Caucus, who deem this figure inadequate.
Rep. Jason Smith, the chair of the Ways and Means Committee, informed his colleagues that negotiations on the exact SALT figure are ongoing. Lawmakers from the SALT Caucus, including Reps. Nick LaLota, Elise Stefanik, Mike Lawler, and Young Kim, have expressed unwavering opposition to the proposed cap. Lawler emphasized, “I will not support any bill that does not adequately lift the cap on SALT,” calling for a more substantial figure to ensure their votes.
While Smith aims to advance the markup process in his committee, the challenges surrounding SALT negotiations add complexity for Johnson, who must navigate these divergent opinions before the final floor vote next week.
Interestingly, some committee members are voicing support for higher cap figures, such as Kim’s suggestion of $62,000 for individual tax filers and $124,000 for joint filers. However, consensus among pro-SALT Republican members appears elusive.
In a potential breakthrough, Rep. Nicole Malliotakis, the only SALT Caucus member on the Ways and Means Committee, endorsed the proposed $30,000 cap, suggesting that Smith may have sufficient support to progress the bill forward.
The broader tax plan aims to prolong the tax cuts established in 2017 and includes various elements of Trump’s agenda, such as providing tax breaks on auto loan interest payments and introducing new savings accounts for newborns, labeled “MAGA accounts.” However, the absence of a tax hike for wealthy individuals, despite Trump’s prior advocacy for it, indicates a rift within the party on tax strategy.
Response from Democrats, particularly from high-tax states like New York, has been critical. They argue that the proposed SALT cap falls short of adequately addressing the needs of constituents in these regions, with Rep. Laura Gillen calling the $30,000 figure “insulting.”
As negotiations continue, it remains crucial for Republicans to reconcile their differing viewpoints to ensure the viability of the proposed tax overhaul while still addressing the needs of their constituents effectively.