ICYMI: SUOZZI, “THE SALT-Y DEMOCRAT,” FROM TUESDAY MORNING’S PUNCHBOWL NEWS
THE TOP
As the brutal behind-the-scenes brawl plays out over the Democrats’ $3.5 trillion reconciliation package, Rep. Thomas Suozzi of New York is warning once again that he and a group of blue state Democrats won’t support any legislation that fails to restore the full deduction for state and local taxes (SALT) eliminated by the 2017 GOP tax bill.
“No SALT, no deal,” Suozzi said in an interview on Tuesday. Suozzi serves on the House Ways and Means Committee, which writes tax policy. “I’m pushing for full repeal.”
Suozzi predicted that SALT repeal language will be included in the proposal released by the Ways and Means Committee as it begins its reconciliation markup, the most critical piece of the overall Democratic package. The panel’s markup is expected to last into next week, and the tax provisions aren’t likely to come up until that time. The opening days of the markup will focus instead on Democratic efforts to create a paid family leave program -- a huge priority for Rep. Richie Neal (D-Mass.), Ways and Means chair -- as well as other social welfare initiatives.
Neal supports restoring the SALT deduction, as does Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer. So Suozzi and his fellow SALT backers, who include Reps. Josh Gottheimer (D-N.J.), Mikie Sherrill (D-N.J.), Bill Pascrell (D-N.J.), among others, have very powerful friends on their side. The issue is how long any repeal would cover -- will it be permanent or will Democrats seek to phase it in by raising the deduction from its current $10,000 cap? These are options that Democrats may use if they need the revenue raised by retaining the provision.
But progressives have balked at repealing the current SALT limit because most of the benefit would go to taxpayers earning $100,000 or more annually. That goes against the Democrats’ message of being the party of the middle class and blue-collar voters.
Rep. Alexandria Ocasio-Cortez (D-N.Y.) has called restoring the deduction a “giveway to the rich” and a “gift to billionaires.” Sen. Bernie Sanders (I-Vt.) told Axios this spring that “it sends a terrible, terrible message when you have Republicans telling us that this is a tax break for the rich.”
Yet the Democratic budget resolution approved by both the House and Senate -- initially drafted by Sanders -- included language that would allow Democrats to restore the SALT deduction.
With only a three-vote margin to work with, Pelosi and House Democratic leaders can’t ignore the SALT opponents. Suozzi said, “I’m certain that we have enough people interested in this topic” to derail the reconciliation package.
Suozzi joked that party leaders “want a restraining order against me because no matter what we discuss, I bring up SALT.”
The dispute over SALT is just one of a number of tax and policy flashpoints being hashed out in “intense” discussions between House and Senate Democrats and the White House. One of the biggest disagreements appears to be over what to do about capital gains, a dispute that’s caused a serious rift between moderate and progressive Democrats in the two chambers. And expanding Medicare to cover vision, dental and hearing programs -- which is being pushed by Sanders -- is coming up against permanently funding Obamacare, another key Democratic priority.
On the issue of corporate tax rates, the Democratic consensus appears to support raising the current rate from 21 percent to 25 percent. Democrats also would raise the maximum individual tax rate from 37 percent to 39.6 percent.
But a host of other decisions have yet to be made on key programs or policy issues. Ways and Means and the Senate Finance Committee have been involved in a lengthy series of negotiations, with White House officials weighing in frequently. The success of the reconciliation package is vital to President Joe Biden, who needs to turn things around after a particularly rough August that saw his poll numbers dive as Afghanistan collapsed and Covid cases soared.
“It’s pretty intense stuff right now,” said a House Democratic lawmaker involved in the three-way talks. “Everything is very fluid, you could see everything change in the next couple of days.