Queens/Long Island Congressman Tom Suozzi is one of many Democrats from blue states drawing a hard line in the sand with the Biden administration, saying that if the State and Local Tax (SALT) deduction cap is not repealed, they will vote against his infrastructure plan.
The SALT cap, at $10,000 for deductions, acts as a threat to New York as residents with the means to leave for greener pastures, money-wise, means the state will have less money for services, as the Trump administration planned when they enacted the limit in 2017 that meant New Yorkers were essentially taxed two-fold.
“The bottom line is that this is an existential threat to the state of New York, people are moving out of New York because they’ve lost the salt deduction, and then it was put on steroids when the pandemic came – when people worked remotely,” Suozzi said. “The taxes are higher in New York, the state and local taxes are higher, but you haven’t had the SALT deduction so it blunted the impact. So we’re concerned that we’re just going to lose too many people. If we don’t get the SALT deduction back.”
Seventeen of 19 Democrats representing New York in congress as well as U.S. Senator Charles Schumer plan to hold out on giving the nod to the $2.3 trillion plan from the Biden administration. Schumer’s influence, as Senate Majority Leaders, could possibly tip the scales in the fight to have the deduction restored though a spokeperson from his office says he is only looking for a legislative path forward.
“It’s really been a body blow to New Yorkers, so no SALT, no deal,” Suozzi said.
In the standoff, the fate of about $85 billion for transit, $55 billion to bring systems into a state of good repair, as well as $25 billion for expansions and $5 billion for renovations to infrastructure that will be stations into compliance with the Americans with Disabilities Act seems murky.
But the congressional deadline for this is July 4 and then it will go through the senate for a vote if the house votes in favor. Meanwhile, New York representatives are not the only ones letting the Biden administration know the infrastructure bill’s ransom will be the SALT cap repeal. It is also happening in California and a caucus is forming to support the movement.
Governor Andrew Cuomo has been harping on the federal government to repeal SALT as well, especially after signing legislation Monday that would the top state tax income rate to 10.9% for incomes above $25 million. With the cap removed, it would mean these individuals would actually be paying 6.9%.
Republicans are taking their own opposition to the infrastructure bill which mandates investments in green energy, requires that prevailing wages are provided and that other existing transit labor protections are met.
South Carolina Senator Lindsey Graham, for example, described the plan as a “target rich environment,” according to The Hill.
But the Biden Administration seems open to discussing SALT with Suozzi and other House members.
“Well, we certainly know this is a proposal that a number of members have. And they’ve advocated for eliminating the SALT deduction — or returning the SALT deduction, I guess I should say,” White House Press Secretary Jen Psaki said during an April 8 briefing with reporters. “It is not a revenue raiser, as you well know. And — but we are open to hearing their ideas, whether it’s this, or whether it is different proposals or different numbers for the corporate tax rate — what it could be raised to; or whether it is different ways we can approach expanding broadband access, or rebuilding our roads, railways, bridges… So we expect this to be a part of the discussion. We expect members to continue to bring forward ideas, including around issues like SALT, and that will be a part of the negotiations moving forward.”