Given the House GOP’s slim margins, blue-state Republicans have considerable leverage in this year’s reconciliation negotiations.
After months of bickering publicly and privately about how to address the state and local tax (SALT) deduction in this year’s tax bill, House Republicans are still at an impasse.
“We’re going to find the equilibrium point on SALT that no one will be totally delighted with, but it’ll solve the equation, and we’ll get it done,” Speaker Mike Johnson (R., La.) told reporters on Monday.
No single House Republican had a larger scrum of reporters around him on Tuesday than Representative Nick LaLota (R., N.Y.), one of the biggest defenders of the deduction, which is popular among blue-state Republicans and reviled by fiscal hawks who believe that the policy unfairly subsidizes high-tax-and-spend schemes in Democratic states like New Jersey, New York, and California. The SALT deduction — which allows individuals or married couples to deduct up to $10,000 of their state and local taxes when filing federal taxes — is set to expire at the end of the year along with many other provisions of the 2017 Tax Cuts and Jobs Act (TCJA).
In a brief interview on Tuesday, LaLota doubled down on his long-held stance that he will not vote for a bill that simply doubles the deduction cap. As for his desired number? “I’ve declined the opportunity to reveal a number publicly to the press or anywhere else,” he told National Review on Tuesday, while reminding reporters of the leverage he and other blue-state Republicans have in this year’s reconciliation negotiations given the House GOP’s slim margins. In 2017, most of the 13 Republicans who voted against the TCJA did so because the bill capped SALT. “It’s unfair to think that somehow, eight years later, members like me are going to vote for a low cap.”
If that’s not enough to make your head spin, there are active disagreements within the pro-SALT caucus about how to address the expiring deduction. In Representative Nicole Malliotakis’s (R., N.Y.) view, any effort to raise the cap beyond the $10,000 point should only apply to people who do not exceed $400,000–$500,000 in yearly income.
“I don’t see that there’s a real interest from anybody, Republican or Democrat, in helping millionaires and billionaires,” Malliotakis, a member of the tax-writing Ways and Means Committee, told Politico. “There’s a lot of opinions on that, but I support some type of income cap, or at a minimum, just targeting to take in middle class families.”
But that suggestion unleashed a tidal wave of opposition from other New York Republicans. “In that one proposal, $400,000 may be rich in Missouri, it ain’t rich in Suffolk County,” LaLota told reporters on Tuesday. “So I think that approach just exacerbates the anti-blue state approach that existed eight years ago.”