SALT Republicans Signal $80,000 Cap Could Be on Table (1)

Two New York Republicans signaled that the cap on the state and local tax deduction may rise to as much as $80,000 as GOP lawmakers from high-tax states demand a boost in exchange for their votes on President Donald Trump’s tax package.

Representative Nicole Malliotakis said Wednesday there’s an “opportunity” to grow the $30,000 state and local tax deduction cap offered by House GOP leaders in negotiations, potentially to as much as $80,000 for couples and $40,000 for individuals.

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Fellow New York Republican Nick LaLota told Bloomberg Television later Wednesday that those limits could be on the table.

Malliotakis signaled that could require other concessions, such as the length of time the higher cap is effective or more stringent income limits. LaLota, however, held firm, stressing that the current $10,000 SALT cap expires at the end of the year.

“Any cap on SALT provides a savings,” he said. “It is not a cost.”

Malliotakis, who represents Staten Island, cautioned that time is running short to negotiate a SALT cap increase, as demanded by lawmakers from high-tax states, following the House Ways and Means Committee’s approval of the bill earlier Wednesday.

“The more time this takes, the more of a low sodium diet my colleagues on Ways and Means are on, you know what I mean,” Malliotakis, who sits on that panel, said. “We had to fight to get 30.”

The legislation hit a bump on Friday as a key House committee rejected the measure after hardline conservatives blocked the bill over cost concerns. Four Republican lawmakers on the panel demanded deeper cuts to Medicaid and other government programs.

The bill sets a $30,000 cap on the SALT deduction for individuals and couples and phases down the deduction for individuals or couples filing jointly with more than $400,000 in income.

Malliotakis supported the increase, but several other Republicans from New York, New Jersey and California rejected the plan as insultingly low.

The lawmakers — LaLota as well as New York’s Mike Lawler, Andrew Garbarino and Elise Stefanik, New Jersey’s Tom Kean and Young Kim of California — have threatened to reject any tax package that does not raise the SALT cap sufficiently.

Representative Nicole Malliotakis

Photographer: Valerie Plesch/Bloomberg

Explainer: How the SALT Fight Threatens the Republican Tax Bill

House Speaker Mike Johnson needs the support of nearly all Republicans to push the tax bill, which is the centerpiece of Trump’s legislative agenda, through the chamber. On Wednesday, Johnson called the ongoing talks “very productive, very positive.”

“We’re going to get to a point of resolution on this,” he told reporters.

The SALT lawmakers plan to meet with Johnson on Thursday morning, Lawler said.

But LaLota warned earlier Wednesday the two sides remain far apart, though he said the speaker has shown more flexibility than Ways and Means Chairman Jason Smith.

“I don’t feel like we’re close unfortunately,” LaLota said. “I feel like there’s some good faith in that room. Different than the rooms that Chairman Smith had been in before. The chairman has unfortunately been giving us faulty data, kooky conclusions. Things that can’t ever get us to yes.”

The SALT issue has been one of the most contentious for the House GOP to resolve as party leaders try to ram a multi-trillion-dollar tax cut package through the House in May. The larger the cap adjustment is, the less money there will be for other tax cuts on the Republican agenda.

House Republicans are trying to keep revenue losses from their tax cut package down to a self-imposed limit of $4.5 trillion. They are also aiming for $2 trillion in spending cuts.

(Updates with key panel rejecting legislation in seventh paragraph. The story first published Wednesday corrected the income at which phase-out would begin in the eighth paragraph.)

--With assistance from Erik Wasson, Billy House, Nacha Cattan, Joe Mathieu and Kailey Leinz.

To contact the reporters on this story:
Emily Birnbaum in Washington at ebirnbaum3@bloomberg.net;
Jarrell Dillard in Washington at jdillard11@bloomberg.net

To contact the editors responsible for this story:
Megan Scully at mscully32@bloomberg.net

Mike Dorning

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