House panel to hold hearings on SALT deduction cap

House panel to hold hearings on SALT deduction cap
© Greg Nash

A House panel is set to hold hearings next week on the GOP tax law's cap on the state and local tax (SALT) deduction — a provision that has been a top concern for politicians in high-tax, Democratic-leaning states.

Rep. Mike ThompsonCharles (Mike) Michael ThompsonHouse Democrats introduce bill to close existing gun loopholes and prevent mass shootings Giffords group unveils gun violence memorial on National Mall Democrats urge Biden to take executive action on assault-style firearms MORE (D-Calif.), chairman of the Ways and Means Subcommittee on Select Revenue Measures, announced Tuesday that his panel is scheduled to hold a hearing on June 25 about how the limits on the SALT deduction are impacting communities, schools, first responders and housing values.

Later that day, the panel will hold a hearing where lawmakers will discuss their proposals related to the SALT deduction cap.

The tax law that President TrumpDonald TrumpTrump PACs brought in over M for the first half of 2021 Chicago owes Trump M tax refund, state's attorney mounts legal challenge Biden hits resistance from unions on vaccine requirement MORE signed in late 2017 capped the SALT deduction at $10,000 for both individuals and married couples.

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Most Republicans support the cap, arguing that it helps to prevent the tax code from subsidizing higher state taxes and noting that most taxpayers even in high-tax states are getting a tax cut from the law. But the cap is opposed by Democrats as well as some Republican lawmakers from high-tax states such as New York and New Jersey, who argue that it's harmful for people in their districts and will make it harder for their states and localities to provide robust services to their residents.

The SALT deduction cap is one of the provisions that Democrats have highlighted on the campaign trail as they make the case against the GOP tax law. A number of House seats in New York, New Jersey and California — where many taxpayers claim the SALT deduction — flipped in the 2018 midterm elections from Republican to Democratic control.

But Democrats face obstacles to rolling back the SALT deduction cap. Trump said he was open to revisiting the SALT deduction cap during a February interview, but key GOP lawmakers, such as Senate Finance Committee Chairman Chuck GrassleyChuck GrassleyBiden's bipartisan deal faces Senate gauntlet The Hill's 12:30 Report - Presented by Facebook - US gymnast wins all-around gold as Simone Biles cheers from the stands The Hill's Morning Report - Presented by Facebook - A huge win for Biden, centrist senators MORE (R-Iowa), have said they don't plan to reconsider it. Additionally, think tanks across the political spectrum have estimated that repealing the cap would primarily benefit the wealthy and cost hundreds of billions of dollars.

The hearings mark the latest step in House Democrats' effort to figure out the path they want to pursue on the SALT deduction. In April, Democrats on the Ways and Means Committee formed a working group to discuss the issue.

Several bills have been introduced to raise or repeal the SALT deduction cap, some of which have bipartisan support. 

For example, Rep. Bill PascrellWilliam (Bill) James PascrellLawmakers can't reconcile weakening the SALT cap with progressive goals Jimmy and Rosalynn Carter celebrate 75th anniversary, longest-married presidential couple Jan. 6 probe poised to spill into 2022, with no complaints from Democrats MORE (D-N.J.) and Sen. Bob MenendezRobert (Bob) MenendezLobbying world This week: Congress starts summer sprint The Innovation and Competition Act is progressive policy MORE (D-N.J.) in February offered a bill to repeal the SALT deduction cap and raise the top individual tax rate. Their bill has the support of Rep. Chris SmithChristopher (Chris) Henry SmithLawmakers form bipartisan Uyghur Caucus to highlight abuses Bipartisan congressional commission urges IOC to postpone, relocate Beijing Games The Hill's Morning Report - Presented by Facebook - Senate path uncertain after House approves Jan. 6 panel MORE (R-N.J.) and several Democratic presidential candidates.

Illinois Democratic Reps. Sean CastenSean CastenDemocrat plugs 'hot FERC summer', sings to 'FERCalicious' on House floor OVERNIGHT ENERGY: Democrats lay out vision for Civilian Climate Corps | Manchin to back controversial public lands nominee | White House details environmental justice plan Sean Casten: Congress moving in 'the right direction' on clean energy MORE and Lauren UnderwoodLauren UnderwoodBiden's midterm strategies start to come into focus Biden aims to build support for jobs and families plan in Illinois Hollywood goes all in for the For the People Act MORE offered a bill in March to increase the SALT deduction cap to $15,000 for single filers and $30,000 for married couples.

Pascrell praised the upcoming hearings.

"The Congress needs to hear from the mayors, educators, police officers, firefighters, realtors, and others about how limiting SALT damages our communities," he said in a statement. "The hearing will also be an important opportunity to highlight my legislation with Senator Menendez that would fully restore SALT.”