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Senate Budget Resolution Includes SALT Deduction Cap Relief

Chris Gaetano
Published Date:
Aug 10, 2021

A memo to Democratic senators outlining what is being sought in the $3.5 trillion budget plan includes instructions to find ways to fund a lifting or removal of the $10,000 cap on state and local tax deductions.

A single line in the document, "SALT cap relief," provides next to no specifics as to what this would entail, but, according to Bloomberg, it nonetheless represents an important win for a growing coalition of lawmakers who have demanded action on the limit, which was imposed as part of the 2017 Tax Cuts and Jobs Act. The coalition of 33 lawmakers, who have pressed for the matter to be included in the memo, are numerous enough to torpedo the spending plan if they are not satisfied with whatever relief emerges, and they  have communicated that they are willing to do so if not heeded. 

At the same time, legislators to their left have criticized the push, saying it's a tax break that mainly benefits the wealthy. Further, it would add hundreds of billions of dollars to the bill's already-gargantuan cost. Boosters countered that the tax base will flee high-tax states without relief, which will imperil government-funded social programs. 

Sen. Bernie Sanders (I-Vt.), a self-described Democratic Socialist and the head of the Senate Budget Committee, had previously been opposed to lifting the SALT cap for the same reasons cited by other critics, but he softened his stance in June. The senator suggested partially restoring the cap, but said that the very wealthy should not be able to benefit.

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