House Democrats promise 'meaningful' relief for state and local tax deduction cap

[BumRushDaShow]

24. I don't think they will end up with a "full repeal"

There have been multiple other solutions out there including raising the CAP. For example, this was what was being bandied about back in July -

Democrats search for sweet spot on ‘SALT’ deduction

Compromise may be at hand over state and local tax deduction


By Lindsey McPherson
Posted July 1, 2021 at 5:30am

House and Senate Democrats are struggling to balance a general desire to make the wealthy pay their fair share with regional interest in restoring a tax break that disproportionately benefits upper-income households. The party has yet to find a solution to its “SALT” problem, but Democrats on both sides of the debate over the deduction for state and local taxes are ready to compromise. Republicans capped the SALT deduction at $10,000 in their 2017 tax law, leading 10 Republicans from high-tax states New Jersey and New York to vote “no.” There’s bipartisan support for repealing the cap, set to expire after 2025. But Democrats are looking to address the issue in a filibuster-proof budget reconciliation bill this fall that’s expected to offset trillions of dollars in new spending with tax increases that won’t get GOP support.

House Democrats can’t lose more than three votes on their side after a July 27 runoff between two Republicans to fill the vacancy in Texas’ 6th District. Senate Democrats can’t lose any in that 50-50 chamber.A compromise short of full repeal appears to be the direction Democrats are headed, lawmakers and aides say. They may lose two House Democrats — New York’s Tom Suozzi and New Jersey’s Josh Gottheimer — who have taken a hard line. But more limited SALT relief is seen as satisfying enough lawmakers to avoid sinking the broader bill. New Jersey Rep. Bill Pascrell Jr., who earlier this year joined Suozzi and Gottheimer in pledging “No SALT, no deal,” said in a brief interview that he’s willing to accept less than full repeal. “I wanted to say I’d set [the cap] to about $25,000. But I’ll settle for [$20,000],” he said.

Support for the SALT deduction has always fallen more on regional lines than ideological ones. Top Democrats such as Senate Majority Leader Charles E. Schumer of New York and Speaker Nancy Pelosi of California support repealing the cap because it would benefit their constituents. But they’re also conscious of concerns from Democrats in lower-tax states that the deduction, which can only be claimed by taxpayers who itemize, helps wealthy households the most. A 2019 Joint Committee on Taxation report projected that 94 percent of the benefits of SALT cap repeal that year would go to taxpayers earning $100,000 or more. But about one-third of returns claiming the deduction would be households in the $100,000 to $200,000 range, the JCT found. In states like New York, New Jersey and California, with higher costs of living, those are middle-income earners.

Sanders proposal

A sign that a potential SALT compromise is in the offing was Senate Budget Chairman Bernie Sanders, I-Vt., setting aside just $120 billion for relief from the $10,000 cap in a draft budget outline. The JCT has told Suozzi’s office that his bill to repeal the cap would cost $385 billion. Sanders didn’t include a specific proposal, but he wants to limit the deduction so it can’t be claimed by the richest taxpayers. “We’re looking at various options,” Sanders said last week. “In high-tax states, it is fair that people can take a serious deduction. On the other hand, when you’re looking at billionaires that own multimillion-dollar mansions, should they be able to get the complete deduction? No.” A source familiar with Sanders’ thinking said he’d be comfortable repealing the cap but phasing out the deduction for those making more than $400,000 annually.

https://www.rollcall.com/2021/07/01/democrats-search-for-sweet-spot-on-salt-deduction/

So like is often the case, we are seeing the "negotiating" and the "sausage-making" playing out in the press.