House panel to hold hearings on SALT deduction cap

A House panel is set to hold hearings next week on the GOP tax law’s cap on the state and local tax (SALT) deduction — a provision that has been a top concern for politicians in high-tax, Democratic-leaning states.

Rep. Mike Thompson (D-Calif.), chairman of the Ways and Means Subcommittee on Select Revenue Measures, announced Tuesday that his panel is scheduled to hold a hearing on June 25 about how the limits on the SALT deduction are impacting communities, schools, first responders and housing values.

Later that day, the panel will hold a hearing where lawmakers will discuss their proposals related to the SALT deduction cap.

The tax law that President Trump signed in late 2017 capped the SALT deduction at $10,000 for both individuals and married couples.{mosads}

Most Republicans support the cap, arguing that it helps to prevent the tax code from subsidizing higher state taxes and noting that most taxpayers even in high-tax states are getting a tax cut from the law. But the cap is opposed by Democrats as well as some Republican lawmakers from high-tax states such as New York and New Jersey, who argue that it’s harmful for people in their districts and will make it harder for their states and localities to provide robust services to their residents.

The SALT deduction cap is one of the provisions that Democrats have highlighted on the campaign trail as they make the case against the GOP tax law. A number of House seats in New York, New Jersey and California — where many taxpayers claim the SALT deduction — flipped in the 2018 midterm elections from Republican to Democratic control.

But Democrats face obstacles to rolling back the SALT deduction cap. Trump said he was open to revisiting the SALT deduction cap during a February interview, but key GOP lawmakers, such as Senate Finance Committee Chairman Chuck Grassley (R-Iowa), have said they don’t plan to reconsider it. Additionally, think tanks across the political spectrum have estimated that repealing the cap would primarily benefit the wealthy and cost hundreds of billions of dollars.

The hearings mark the latest step in House Democrats’ effort to figure out the path they want to pursue on the SALT deduction. In April, Democrats on the Ways and Means Committee formed a working group to discuss the issue.

Several bills have been introduced to raise or repeal the SALT deduction cap, some of which have bipartisan support. 

For example, Rep. Bill Pascrell (D-N.J.) and Sen. Bob Menendez (D-N.J.) in February offered a bill to repeal the SALT deduction cap and raise the top individual tax rate. Their bill has the support of Rep. Chris Smith (R-N.J.) and several Democratic presidential candidates.

Illinois Democratic Reps. Sean Casten and Lauren Underwood offered a bill in March to increase the SALT deduction cap to $15,000 for single filers and $30,000 for married couples.

Pascrell praised the upcoming hearings.

“The Congress needs to hear from the mayors, educators, police officers, firefighters, realtors, and others about how limiting SALT damages our communities,” he said in a statement. “The hearing will also be an important opportunity to highlight my legislation with Senator Menendez that would fully restore SALT.”