Dem tax-writers forming working group on SALT deduction cap

House Ways and Means Committee Democrats are forming a working group to discuss a provision in President TrumpDonald John TrumpPelosi eyes end of April to bring a fourth coronavirus relief bill to the floor NBA to contribute 1 million surgical masks to NY essential workers Private equity firm with ties to Kushner asks Trump administration to relax rules on loan program: report MORE's tax-cut law that many lawmakers in blue states find concerning.

Committee Chairman Richard NealRichard Edmund NealDemocrats urge administration to automatically issue coronavirus checks to more people One year in, Democrats frustrated by fight for Trump tax returns Pelosi forms House committee to oversee coronavirus response MORE (D-Mass.) said Tuesday that he's asked Rep. Mike ThompsonCharles (Mike) Michael ThompsonPelosi digs in on impeachment rules fight House votes to temporarily repeal Trump SALT deduction cap On The Money: Pelosi, Trump tout deal on new NAFTA | McConnell says no trade vote until impeachment trial wraps up | Lawmakers push spending deadline to Thursday MORE (D-Calf.), the chairman of the committee's tax subcommittee, to convene a working group on the tax law's $10,000 cap on the state and local tax deduction.

The working group is expected to meet Wednesday afternoon, according to the committee.

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The working group would be "for members of our committee that are interested in solving this challenge," Neal said during the Ways and Means Committee's markup of IRS and retirement legislation. 

"We know that the limitation on the SALT deduction is an important issue that the committee perhaps can address in this Congress," he added. Neal pointed out that Trump has expressed a willingness to revisit the SALT deduction cap.

Many politicians in high-tax states such as New York, New Jersey and California have been criticizing the cap on the SALT deduction. They argue that the cap has caused some taxpayers in their districts to see increases in their taxes and that the cap hurts their states' ability to generate the tax revenue needed to fund public services.

But most Republicans are supportive of the cap, which they included in the tax law as a way to raise revenue to pay for tax cuts elsewhere in their legislation. They point out that most people are getting a tax cut under the GOP law and that repealing the SALT deduction cap would mainly benefit high earners. They also are encouraging blue-state governors to cut their states' taxes.

Thompson told reporters on Tuesday that he is planning to hold a roundtable for Ways and Means committee members. He said the working group would be an opportunity to talk about the SALT deduction cap "and find out if there's any improvements we can make."

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"I want to understand all of the impact," he said. "This has caused some problems in a lot of states. It's diverted money away from programs that are important to constituents that we all represent."

Rep. Bill PascrellWilliam (Bill) James PascrellOne year in, Democrats frustrated by fight for Trump tax returns Hispanic Caucus campaign arm unveils non-Hispanic endorsements Biden rolls out over a dozen congressional endorsements after latest primary wins MORE (D-N.J.), a senior Ways and Means Committee member, has introduced legislation to restore the full SALT deduction and also raise the top individual tax rate from 37 percent to 39.6 percent. The legislation is co-sponsored by several other Ways and Means Committee Democrats.

Pascrell told reporters that he doesn't want the working group to last long because he wants "to get something done." He said he's sticking with his legislation.