On Feb. 14, the U.S. House of Representatives blocked a bill to increase the state and local tax (SALT) deduction cap, The Washington Post reported.
The bill, the SALT Marriage Penalty Elimination Act, sponsored by Rep. Michael Lawler (R-N.Y.), would have raised the cap from $10,000 to $20,000, just for one year, for married couples who file taxes jointly and make up to $500,000.
It is primarily wealthier taxpayers who take the SALT deduction because they earn enough to owe larger SALT bills and have enough other deductions to make it worth itemizing rather than taking the standard deduction, the Post previously reported. The current standard deduction for couples filing jointly is $27,700.
The nonpartisan Tax Foundation found that the vast majority of the benefits of doubling the cap would go to couples who earn more than $200,000, and between a third and half of them would see a tax cut, the Post reported. A different nonpartisan estimate by the Penn Wharton Budget Model at the University of Pennsylvania found that the legislation would cost $12 billion in lost federal tax revenue.
Lawler’s bill was supported by other Republican lawmakers from Democratic-controlled states. But several other congressional Republicans have criticized the SALT proposal as a subsidy for taxpayers in Democratic-controlled states at the expense of those in GOP-run states with lower taxes. Some New York Republicans and some Democrats maintained that blue states contribute far more to federal tax revenue than red states.
One of those Republicans is Rep. Nick LaLota (R-N.Y.) of eastern Long Island. “I’m from a blue state, and I’m willing to concede to my red state colleagues especially that an increase in the SALT cap benefits blue states more than red states,” he said on the House floor. “But as bloated and out of control as my state’s taxes and spending are under one-party Democrat rule, it cannot be said, truthfully, that red states are subsidizing the blue states. Blue states like mine are giving far more to Washington than we get back.”