Seventeen House Democrats from New York state on Tuesday threatened to withhold their votes for President Biden’s tax proposals if the final plan doesn’t repeal a $10,000 cap on a prized state and local tax deduction.
The 2017 Republican tax law imposed the cap on the deduction, known as SALT in tax-speak. Democrats, and some blue-state Republicans, have been gunning to restore the benefit ever since.
“At the end of the day, we must fix this injustice. No SALT, no deal,” said Rep. Tom Suozzi, one of the New York Democrats leading the new charge.
House Speaker Nancy Pelosi and the Democrats hold a razor-thin 218-211 majority in the chamber, giving the party almost no room for error on any bill that doesn’t win bipartisan support.
The new letter to party leadership from the increasing number of SALT holdouts left the other members a bit more wiggle room than Mr. Suozzi’s line in the sand.
“This issue is so critical to our state and our constituents that we will reserve the right to oppose any tax legislation that does not include a full repeal of the SALT limitation,” the lawmakers said.
They concluded by saying they “will not hesitate to oppose” any tax legislation that doesn’t fully restore the deduction.
Reps. Alexandria Ocasio-Cortez and Kathleen Rice were the only two members of the state’s House Democratic delegation who didn’t sign the letter.
Senate Majority Leader Charles E. Schumer and Sen. Kirsten E. Gillibrand, New York’s two Democratic senators, are vocal proponents of restoring the break.
“I fully support SALT restoration,” Ms. Gillibrand said Tuesday.
“We’ll see what happens,” she said when asked if she would vote against a bill that doesn’t restore the break.
Senate Minority Leader Mitch McConnell of Kentucky appeared to grin slightly as he relayed the news of some “no SALT, no deal” House Democrats.
Mr. McConnell said there’s no guarantee Mr. Schumer can hold his troops together on a package in the 50-50 Senate.
“Just lining everybody up and getting all 50 in one place when you’re not talking about COVID relief may be a challenge for them,” Mr. McConnell said.
Democrats have effective control of the chamber thanks to Vice President Kamala Harris’ tie-breaking vote.
Republicans say the deduction effectively subsidizes blue states’ decisions to raise taxes and point out that most of the benefits flow to upper-income individuals.
The Democrats fighting to restore the full deduction said the benefit is a vital lifeline for “middle-class families” in high cost-of-living states such as New York and California.
Restoring the full deduction would reduce federal tax revenue, increasing the overall price tag of Mr. Biden’s proposals.
The president is already getting bipartisan pushback on his plans to raise corporate taxes by an estimated $2.5 trillion to pay for his $2.3 trillion infrastructure plan over time.