Trump’s lawsuit over tax change threatens the infrastructure bill
Donald Trump’s 2017 tax reform dispute is hampering Joe Biden’s $ 2 million infrastructure proposal, as more and more Capitol Hill lawmakers threaten to vote against any tax and spending plans that don’t reverse a key provision of Trump’s changes.
Twenty-two members of the Democratic and Republican House of Representatives have this week formed a “Salt” caucus against the state and local federal tax deductions limit, which has led to a higher bill for homes in states like New York. New Jersey and California.
Separated by more than a dozen New York lawmakers he wrote Nancy Pelosi, a Democratic spokeswoman for the House, said the issue was “critical.”
“We reserve the right to oppose any tax legislation that does not include the complete abolition of the salt limit,” they added.
Kirsten Gillibrand, a Democratic senator from New York, said this week that she “fully supports” the dissolution of the Salt Cap, and did not rule out voting against a bill that does not include politics, saying, “We’ll see what happens.”
Their threats carry a lot of weight when Democrats control the House of Representatives by a six-vote margin and the Senate splits 50-50 between parties. Biden will need the support of both houses of Congress if he wants to carry out his ambitious $ 2 million infrastructure plan, which he plans to pay largely with a corporate tax rate hike.
Pelosi, the congressional constituency occupies most of San Francisco, and Chuck Schumer, the Senate’s top Democrat representing New York, both said they are in favor of removing the cap in advance.
But removing the threshold would leave Biden, Pelosi, and Schumer open to the charge of hypocrisy, a move like this would lead to a tax cut for the wealthiest Americans, at a time when the White House is focusing on the poorest. Canceling the cap would come at a high cost, raising the price of an unprecedented spending proposal.
Joint Congress Committee on Taxation estimated the cancellation of the cap in 2019 last year would reduce federal revenue by about $ 77 billion.
White House press secretary Jen Psaki said on Thursday that Biden had not removed the Salt cap in its infrastructure proposal. But he added: “We understand that there are many members who feel strongly about it.”
“There should be a discussion about how it would be paid, what would come out of it,” he said. “Then we discuss what is most important to achieve our main goals.”
Before Trump pushes his deep tax reforms in 2017, homes can deduct state and local property taxes from federal income tax. But Trump limited those annual deductions to $ 10,000 in a move toward state and local property tax holders in states such as New York, New Jersey and California.
Critics accused the former president of directing people in “blue” states that often vote for Democrats; the allies stressed that the White House needed to raise revenue to pay for the large tax cuts for many people and businesses.
This time, the discussion about deductions has cut the lines of the parties. As Democrats and Republicans lined up to oppose the cap, another group of lawmakers on both sides said they were against removing it.
New York Progressive Congresswoman Alexandria Ocasio-Cortez has said lawmakers should not have “infrastructure hijacked” to repeal tax changes.
“Personally, I can’t stress how much I think it’s a gift for the rich,” he added.
Republican Sen. Pat Toomey of Pennsylvania said the recovery in the deduction “will once again force low- and middle-income people to help rich people in high-tax states and municipalities.”
According to Center for Tax Policy, a non-partisan Urban Institute and Brookings Institution joint venture, raising the cap would be of great benefit to the wealthy, as it would focus on the top five of those earning 96 percent of profits. Analyzes show that more than half (57%) would benefit the first percent.
But newly formed Salt Caucus lawmakers stress that lifting the cap will also help middle-class families.
“There’s a misconception that salt deduction doesn’t help middle-class families. But in high cost of living like my neighborhood, Salt makes a critical difference when it helps our middle-class residents respond to teachers and law enforcement officials because our deduction depends on our high cost of living to pay, ”said Mikie Sherrill, a member of the New Jersey Democratic House.
Andrew Garbarino, a New York Republican, agreed.
“The Salt cap punishes the working class on Long Island,” he said. “From firefighters to police officers, teachers, nurses and small business owners, I hear every day what a crushing blow people have received from the Salt Cap.”