Negotiations over President Joe Biden’s infrastructure agreement with Congress are met with demands to eliminate a $10,000 cap on state and local deductions.
Stephen Acquario, general counsel to the New York State Association of Counties, said repealing the cap will not only benefit high-tax states like New York, but the rest of the country.
“We are the United States. And we should be united to overturn this, a cap on state and local tax deductions and return back to a sense of historical fairness,” Acquario said.
U.S. Rep. Tom Suozzi and Senate Majority Leader Chuck Schumer (D-NY) introduced legislation in January to repeal the SALT cap. Suozzi has pledged to vote against any changes to the tax code without the repeal.
A bipartisan group of over a hundred members of Congress have signed on to the legislation.
“The more people that affirmatively say ‘no salt, no deal,’the more leverage we'll have to actually get this done,” Suozzi said.
State and local tax deductions were capped at $10,000 in 2017 under GOP-led changes to the federal tax code. Suozzi wants Biden’s plan to fund childcare, infrastructure and post-secondary education to also include lifting that cap to make it easier to live on Long Island.
"This is affecting, whether it's people who deduct $20,000 or $30,000, or people who deduct $100,000. We don't want people leaving our states. When people leave our states that leaves a big hole in our revenues,” Suozzi said.
“The bottom line is it's cheaper to live in Florida and Texas,” he continued. "It's their lowered state and local taxes. Why? They don't have unions. They don't insure their children. They never adopted the Affordable Care Act. They don't have mass transit systems. ... We just do a lot more government things that have an impact on the quality of life and quality services and the incomes of the people that live here.”
A study from The Institute On Taxation and Economic Policyfound that repealing the cap would cost roughly $100 billion in 2022 alone and benefits would mainly flow to those making over $200,000 a year. However, before SALT was capped at $10,000, nearly half of Long Island’s taxpayers had claimed nearly $20,000 in SALT deductions.
Irma Esparaza Diggs, director of federal advocacy with The National League of Cities, said eliminating the cap is also essential to pandemic recovery.
"Our municipalities need every tool available to them to ensure that they can continue to maintain essential services throughout our nation's recovery and restoring the SALT deduction is the right decision for all of our city residents and for middle class families across the country," Diggs said.
