Senate Democrats to force vote Wednesday to overturn IRS rules on SALT deduction cap

Senate Democrats to force vote Wednesday to overturn IRS rules on SALT deduction cap
© Greg Nash

Senate Democrats are expected to force a vote on Wednesday to overturn IRS regulations blocking workarounds to a provision in President TrumpDonald John TrumpWinners and losers from the South Carolina debate Five takeaways from the Democratic debate Democrats duke it out in most negative debate so far MORE's 2017 tax-cut law, lawmakers announced Tuesday.

Democrats are expected to bring up a resolution that would disapprove of rules aimed at preventing blue states from circumventing the GOP tax law's $10,000 cap on the state and local tax (SALT) deduction. The SALT deduction cap and the IRS rules blocking blue states' workarounds to it are strongly opposed by Democratic lawmakers in high-tax states such as New York and New Jersey.

"On Wednesday, Senate Democrats will force a vote to nullify the IRS’s horrible rule and put power back in the hands of homeowners," Senate Minority Leader Charles SchumerCharles (Chuck) Ellis SchumerOvernight Health Care — Presented by American Health Care Association — Lawmakers raise alarms over Trump coronavirus response | Top official warns virus appears inevitable in US | Democrats block two Senate abortion bills Lawmakers raise alarms over Trump coronavirus response Democrats block two Senate abortion bills MORE (D-N.Y.) said in a statement. "America’s homeowners shouldn’t be forced to bear the brunt of the GOP’s political games.”


Republicans included the SALT deduction cap in their 2017 law in order to raise revenue that could be used to finance other tax cuts and because they thought that the deduction was subsidizing higher state taxes. Key GOP lawmakers defend the cap, noting that most people in high-tax states received a tax cut under the law.

But the cap has been criticized by Democrats as well as by a few GOP House members in high-tax states, who argue that it hurts their residents and hinders their states' abilities to offer public services.

Several high-tax states enacted legislation in an effort to try to circumvent the cap, creating programs under which people could donate to state and local funds and receive a tax credit against their state and local taxes.

But in June, the IRS issued final regulations that prevent those funds from working as workarounds to the SALT deduction cap, upsetting policymakers in high-tax states.

Democrats plan to force a vote on the IRS rules by using the Congressional Review Act, which allows Congress to vote to nullify recently finalized guidance items. Senators can force a vote on a Congressional Review Act resolution with the signature of 30 senators.

“With this CRA, we will force Republicans in the Senate to take notice," said Sen. Bob MenendezRobert (Bob) MenendezMenendez calls for 'Marie Yovanovitch bill' to protect foreign service employees Senators condemn UN 'blacklisting' of US companies in Israeli settlements Media's selective outrage exposed in McSally-Raju kerfuffle MORE (D-N.J.), a member of the tax-writing Senate Finance Committee. "It’s time to reverse the IRS’s flawed and unfair rule that arbitrarily crippled states’ efforts to make investments in education, public safety and job-creation while protecting hard-working, middle class families from even higher property tax burdens.”

Democrats face challenges to passing their resolution, since it needs 50 votes to pass and a majority of senators are Republicans. In an effort to get Republicans to support their measure, Democrats are pointing out that the IRS rules also curbed the federal tax benefits of donation and tax credit programs in red states.

"Republican senators have been requesting help for constituents who have been harmed by these regulations so they should join Democrats in overturning them,” Senate Finance Committee ranking member Ron WydenRonald (Ron) Lee WydenRussian interference reports rock Capitol Hill McSally unveils bill to lower drug prices amid tough campaign Graham: Trump has 'all the legal authority in the world' to pardon Stone MORE (D-Ore.) said.

Schumer had first announced earlier this month that Senate Democrats would force a vote on the rules — one of several votes to overturn Trump administration regulations that Senate Democrats are forcing this fall.