On Politics: Lifting SALT cap is no sure bet under Trump

Will New York’s congressional delegation be able to raise the SALT cap?

For both Republicans and suburban Democrats, this is a primary concern heading into Donald Trump’s new term. In 2017, when Trump was president, congressional Republicans successfully passed tax-cut legislation that also capped the state and local tax deduction at $10,000, in a bid to make up for revenue that was lost in the overall bill. It was also designed to punish voters in the Democrat-heavy Northeast, where property and state income taxes are relatively high.

This has put New York’s congressional Republicans in an awkward position. Representing, largely, suburban and home-owning constituencies, they need Trump and Speaker Mike Johnson to undo a law that their party championed. Trump, for now, appears on their side. When the New York Republicans came to visit the president-elect at Mar-a-Lago recently, he told them to come up with a plan for increasing the state and local tax deduction.

Since 2017, suburban Democrats and Republicans alike have been charging hard to raise the SALT cap. The Biden administration showed little interest, though, and Northeast Republicans found themselves in conflict with members of their own party who reside in lower-tax states. For them, the cap was fine, and they weren’t interested in helping out the Northeast and California.

During the presidential campaign, Trump himself said he would “get SALT back,” never mentioning that he was the one who capped the deduction in the first place. If the New York Republicans have new momentum now, with a former New Yorker on their side, there’s still no agreement on how the limit would be increased. The trouble for them is that Republicans barely control the House — once two of Trump’s federal nominees, Elise Stefanik and Michael Waltz, are confirmed, their majority will be shrunk to one — and Johnson has no margin for error.

If fiscally conservative Republicans in other states balk, the new tax package, which is expected to pass during the budget reconciliation process, could easily keep the $10,000 cap in place. In the meantime, Republicans and Democrats have different ideas for SALT. Some want to raise the limit for the deduction as high as $200,000. Others are seeking a smaller increase that would be paired with gradual hikes over time that match the pace of inflation.

The $10,000 current cap applies to both individuals and married couples, and lawmakers who want the cap raised may be in agreement that couples should take a larger deduction than individuals.

Ultimately, lifting the cap on the deduction will be quite expensive. The tax bill Republicans are exploring this year could further raise the deficit, putting pressure on other Republicans to back keeping the cap in place. Lawmakers have mulled limiting the ability of businesses to deduct state and local taxes from their federal bills to try to cover the cost of any changes.

Another challenge will be progressive Democrats. If conservatives in other states don’t want to lift the cap, viewing such a move as a rank giveaway to affluent liberals, progressives aren’t necessarily excited about offering homeowners with valuable properties the ability to dodge local taxes. Alexandria Ocasio-Cortez, for example, has not joined her New York colleagues in advocating for anything related to SALT.

What will actually happen? In Washington, life is forever unpredictable, especially with Trump in charge. All eyes will be on Johnson, who barely has a majority and seems to be constantly fighting to save his speakership. Getting the votes for anything, let alone SALT, will be a major struggle of the new year.

Ross Barkan is a journalist and author in New York City.