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 TrumpTrump marks 'very sad milestone' of 100K coronavirus deaths DOJ: George Floyd death investigation a 'top priority' Lifting our voices — and votes 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 SchumerLawmakers introduce bill to invest 0 billion in science, tech research The Democrats' out-party advantage in 2020 Democratic leaders say Trump testing strategy is 'to deny the truth' about lack of supplies 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) MenendezSenate panel approves Trump nominee under investigation Hillicon Valley: Trump threatens Michigan, Nevada over mail-in voting | Officials call for broadband expansion during pandemic | Democrats call for investigation into Uber-Grubhub deal Senate chairman schedules vote on Trump nominee under investigation 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 WydenPelosi pulls vote on FISA bill after Trump veto threat FISA 'reform': Groundhog Day edition Hillicon Valley: House FISA bill in jeopardy | Democrats drop controversial surveillance measure | GOP working on legislation to strip Twitter of federal liability protections 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.