New Jersey lawmakers press for SALT cap repeal in next relief package

New Jersey’s House members are urging the Biden administration and congressional leaders to include repeal of the cap on the state and local tax (SALT) deduction in the next coronavirus relief bill.

“Relief from the unfair and destructive SALT cap offers the precise breed of action our constituents, states, and localities will benefit from immediately,” the lawmakers wrote in letters Wednesday to Treasury Secretary Janet Yellen and to House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Charles Schumer (D-N.Y.).

Every House member from New Jersey signed the letters, including the delegation’s two Republican members: Reps. Chris Smith and Jeff Van Drew. Rep. Josh Gottheimer (D-N.J.) highlighted the letters at an event in the state Wednesday.

Former President Trump’s 2017 tax-cut law created a $10,000 cap on the SALT deduction. Most GOP lawmakers support the cap and have highlighted studies showing that repealing it would primarily benefit high-income households. But politicians in high-tax states such as New Jersey, New York and California have been highly critical of the SALT deduction cap, arguing that it hurts their residents as well as their states’ ability to provide robust services to residents.

The New Jersey House members said in their letter that government employment has declined since the pandemic began and that the job losses are concentrated in areas such as education. They also said that many of the states that have been hit hardest by the pandemic are those that send more money to the federal government than they receive.

“Removing the SALT cap would be a textbook method to provide relief to communities ravaged by the pandemic,” the lawmakers wrote.

House Democrats last year passed two coronavirus relief bills that included the temporary repeal of the SALT deduction cap, but those bills were not taken up by the Senate. Repeal of the deduction cap was not included in the $1.9 trillion relief package that Biden proposed earlier this month.

During her confirmation hearing last week, Yellen said that before making a decision about the SALT deduction cap, Treasury should study the impact of the cap on state and local governments.