Senate Budget Committee Chairman Bernie Sanders (I-Vt.) on Tuesday fired a warning shot at a five-year repeal of the cap on the state and local tax (SALT) deduction that Democrats are considering including in their social and climate spending bill.
Democrats are eyeing repealing the Trump-era $10,000 cap through 2025, but Sanders, in a statement, called the move “beyond unacceptable.”
“At a time of massive income and wealth inequality, the last thing we should be doing is giving more tax breaks to the very rich. Democrats campaigned and won on an agenda that demands that the very wealthy finally pay their fair share, not one that gives them more tax breaks,” Sanders said.
“I am open to a compromise approach which protects the middle class in high tax states. I will not support more tax breaks for billionaires,” he added.
Sanders’s red line is significant because Democrats need all 50 members of their Senate caucus to support the bill in order to pass it under the budget rules that let them avoid a GOP filibuster. That empowers any individual member to demand changes or provisions to be dropped entirely.
Changes to the SALT deduction cap are a top priority for Democrats in high-tax states such as New York and New Jersey who worry that as currently structured it unfairly targets their constituents, with Rep. Josh Gottheimer (D-N.J.) saying earlier Tuesday that a lifting of the deduction cap “will be in the final legislative package.”
But lifting the SALT cap has garnered pushback from progressives who worry that it will give a tax break to wealthier Americans.
Sanders, in his statement, argued that the proposal under discussion among House Democrats would mean “the top 1% would pay lower taxes after passage of the Build Back Better plan than they did after the Trump tax cut in 2017. This is beyond unacceptable.”
Sanders had previously signaled an openness to adjusting the deduction cap, but the proposal being discussed currently among Democrats would effectively suspend the SALT cap altogether until 2026.
Sanders, speaking to reporters early Tuesday evening, suggested that he wanted to place income restrictions on who could qualify for the repeal on the SALT cap deduction. Sanders said that he and his staff were thinking about a restriction for incomes above $400,000, but was up for negotiating the number.
“The truth is that in high tax states like New York and California housing is enormously expensive. …People are paying a whole lot in property taxes. I think we should deal with that to the degree that it impacts the middle class, part of upper middle class,” he said.
“But what we should not be doing is …repealing the SALT for you know people who own mansions and are billionaires,” he added.
Sanders also previously suggested that any changes to the SALT deduction cap should be focused on the middle class.
“There are middle-class families in states where property taxes are very high that are paying a whole lot in state and local taxes. And I think we have to support them,” Sanders said during an interview with MSNBC in June.
“On the other hand, if you got some billionaires who own a massive mansion, should they be able to write off their state and local taxes? The answer is no, they should not,” he added.