As some Democrats push for SALT cap reform, others remain MIA

Just months after their own proposals first prompted headlines on the topic, congressional Democrats seem to have gone missing in action on an important economic issue.

The Washington Examiner reports that while some Democrats in Washington are still pushing to raise a cap on state and local tax (SALT) deductions that Americans can claim on their federal returns, many progressives “have gone silent” when it comes to the tax relief proposal.

A cap on deductions

Currently, there remains a $10,000 SALT cap limiting deductions that individuals and couples can claim for paid state and local taxes. The rule was first put in place under former President Donald Trump and Republicans as part of their 2017 tax overhaul, NBC News reports.

Notably, Senate Democrats’ budget proposal for 2022 includes mention of “SALT cap relief” that would raise the cap on these kinds of deductions.

In a separate report, the Examiner said “the proposal comes after vocal advocates in the self-described ‘SALT caucus’ pushed for changes to the tax code.”

Breaking it down

Those in favor of raising the SALT cap generally comprise members of Congress who represent states with high taxes. According to the Examiner, they argue “that the cap doesn’t just affect wealthy people,” but also lower- and middle-class Americans “because of the cost of living in their districts.”

Some more progressive members of the Democratic Party have argued otherwise, however.

As for who is right and who is wrong, an analysis by the Tax Policy Center found that only 3% of middle-class households would end up paying less in taxes if the SALT cap was eliminated, the Examiner notes.

In addition, the left-leaning Institute on Taxation and Economic Policy (TEP) found in a recent study that about $67 billion in relief would go to white taxpayers with an annual income of $200,000 or more if the SALT cap were repealed.

The silence continues

Considering all of this, one would expect a number of Democrats to come out against the idea. But they haven’t — and it’s more than a little suspicious.

The Democrats last tried to remove the SALT cap in 2019, when they had a 34-member lead in the House. The effort though failed in the Senate. Now, it is going to be much harder with Dems’ much narrower majority in the House.

One point of note, though, is that Democrats are trying to push the measure through the Senate using budget reconciliation, meaning no Republican support would be needed in the upper chamber. Even still, it is unclear if an obviously divided caucus can come together on an issue that seems to have largely fallen off their radar.

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