Schumer pushes for elimination of SALT deduction cap in next coronavirus relief bill

Senate Minority Leader Charles Schumer (D-N.Y.) on Tuesday pushed for the cap on the state and local tax (SALT) deduction to be undone in the next coronavirus relief package, as Democrats and Republicans are expected to start negotiations on another relief bill in the near future.

During a press conference on Long Island, reported on by Newsday, Schumer urged Senate Majority Leader Mitch McConnell (R-Ky.) to “join the House, and join the Democrats in the Senate, and get rid of that cap.”

House Democrats passed a coronavirus relief bill in May that would repeal the SALT deduction cap for two years, but that bill is not expected to be considered in the Republican-controlled Senate. McConnell said on Monday that he expects the Senate to start working on a bill when senators return to Washington D.C. next week.

Schumer said that keeping the House bill’s provision on the SALT deduction cap is top priority for Senate Democrats in the next coronavirus relief package, along with assistance for state and local governments and money for schools.

“We need to cushion the blow of this virus,” Schumer said. “The SALT cap hurts people affected by the virus. It hurts so many of the metropolitan areas like New York.”

A rollback of the SALT deduction cap is unlikely to be included in a relief package that becomes law. Most Republicans oppose repealing the cap, arguing that a repeal would primarily benefit high-income people.

In a speech on the Senate floor late last month, McConnell criticized the SALT deduction cap rollback in the House bill, saying the measure “would change tax law to provide massively expensive gifts to wealthy people in high-tax blue states.”

President Trump’s 2017 tax-cut law capped the SALT deduction at $10,000. Republicans included the cap in order to raise revenue that could be used to offset the cost of tax cuts elsewhere in the bill, and they argued that the cap would help prevent the federal tax code from subsidizing higher state taxes.

But the SALT deduction cap is unpopular with many politicians in high-tax, Democratic leaning states like New York, New Jersey and California, who argue that it has hurt residents and makes it harder for their states to provide robust services. Several GOP House members in high-tax states joined with Democrats in voting against the 2017 law.

Schumer spoke at Tuesday’s press conference along with Rep. Tom Suozzi (D-N.Y.), a member of the tax-writing House Ways and Means Committee who has been one of the leading proponents in the House of repealing the SALT deduction cap.

If Democrats win control of the Senate in the 2020 elections, Schumer is poised to become the chamber’s majority leader. Schumer said that Senate Democrats would make it a priority to permanently eliminate the SALT deduction cap if they are in the majority in 2021.

“I want to tell you this: If I become majority leader, one of the first things I will do is we will eliminate it forever,” he said. “It will be dead, gone and buried.”

– updated at 10:45 p.m.