A long-shot attempt to temporarily double the $10,000 cap on state and local tax deductions for most married couples was defeated in the House on Wednesday.
The cap was introduced as part of sweeping tax cuts passed by the Republican-led Congress during the administration of then-President Donald Trump. The so-called SALT cap has led to higher taxes for many residents of New York, New Jersey, California and other high-cost, high-tax states, and is a major campaign issue in those states.
A procedural vote to introduce the legislation was rejected by a vote of 195-225.
Although unsuccessful, the vote gave Republicans in swing congressional districts a chance to show they are fighting to win tax relief for voters who are now unable to fully deduct the amount of local and state taxes they pay. It’s an especially important issue for Republican members of New York’s delegation, some of whom serve in districts won by President Joe Biden in 2020.
Underscoring the political dynamics at play, the vote came just a day after Democrats regained a House seat in New York, with Tom Suozzi winning the seat left vacant last year when Republican Rep. George Santos was ousted from the assignment.
“I think this shows people back home that the Republicans who put Biden in districts here fought hard to put him on the field,” said Rep. Anthony D’Esposito, who represents one of those districts.
Democrats used the debate Wednesday to remind supporters of the bill which party was responsible for imposing the $10,000 cap. Republicans capped the deduction to help pay for other tax cuts in the 2017 package. They also viewed the vote as an “election ploy to help New York Republicans win upcoming elections.”
“They created this problem that now they want to put a Band-Aid on,” Rep. Teresa Leger Fernandez, D-N.M., said of House Republicans.
Under current law, the $10,000 cap applies to singles and married couples filing jointly. The bill by Rep. Mike Lawler, R-N.Y., would double the cap for married couples who file taxes jointly and earn up to $500,000. The change would apply only to fiscal year 2023. Lawler said the current cap penalizes married couples.
Nearly half of taxpayers in his district claimed the state and local tax deduction before the law was changed during the Trump administration. Now, it’s about one in five, he said. Nationally, the percentage of taxpayers claiming the deduction has dropped from about 31% to 9%, he said.
“This sharp decrease has had a disproportionate impact on high-cost states like New York, where the cost of living far exceeds the national average,” Lawler said.
After the vote, Lawler said that New York Republicans fought for their districts and the state, and that “New York Democrats helped chip away at the bill.” She said Democratic Leader Hakeem Jeffries urged colleagues to vote against the procedural rule.
“I think it’s unfortunate that New York Democrats ignored the rule and didn’t allow a vote for or against the bill,” Lawler said.
The issue transcends political parties. Eighteen Republicans from states where caps on deductions are not an issue for the vast majority of taxpayers also voted against the rule allowing the measure to be considered. All Democrats also voted against the advancement.
Analysts say eliminating the cap, or even doubling it for married couples filing jointly, would deprive the federal treasury of revenue and increase federal deficits. They also said the adjustment would primarily benefit higher-income families.
The $10,000 cap, like many of the provisions of the 2017 tax law, is set to expire on December 31, 2025, placing tax policy at the top of the list of issues to be considered in the next Congress. That deadline presumably gives lawmakers in New York, New Jersey and other states most heavily affected by the cap greater leverage to force a change.