(Reuters) – Several U.S. House members from President Joe Biden’s Democratic Party are threatening to block a renewed push for his Build Back Better spending bill if it does not include the expansion of a federal deduction for taxes paid to states and local entities.
Expanding the deduction, known as SALT for State and Local Taxes, has been a demand of lawmakers in higher-tax states such as California, New Jersey and New York, especially in suburbs where Democrats seek to retain control in Nov. 8 elections.
“We support the president’s agenda, and if there are any efforts that include a change in the tax code, then a SALT fix must be part of it. No SALT, no deal,” members Tom Suozzi of New York and Mikie Sherrill and Josh Gottheimer, both of New Jersey, said in a joint statement late on Thursday.
The SALT deduction, part of the U.S. income tax code from its inception more than a century ago, was restricted to $10,000 in a 2017 Republican tax law.
The cap disproportionately affects homeowners in higher home-value states that lean toward the Democratic Party, like New Jersey, where the average homeowner pays roughly $9,000 in local property taxes.
Asked about the House lawmakers’ demand, a Biden White House official said: “We are in touch with a wide range of lawmakers regarding the president’s economic growth plan for the middle class, and weighed in about SALT late last year, but we won’t negotiate in public.”
The “SALT caucus” has more than 30 members in the House of Representatives who want to expand the deduction, including some Republicans, congressional aides say.
Their demand adds to the challenges the White House faces as it tries to salvage some of Biden’s $1.7 trillion spending package and push it through with slim congressional majorities.
As the White House tries to downsize that bill, it may need to jettison hundreds of billions of dollars in social programs, but preserve SALT, a tax deduction that some in the party call a giveaway to the rich.
House Speaker Nancy Pelosi can only afford three defections because Democrats narrowly control a majority in the 435-member House.
The House passed a version of Biden’s social-spending bill that increased the cap to $80,000, despite objections from some progressives that it largely benefits higher-income households. The bill died in the 100-member Senate for lack of majority Democratic support.
(Reporting by Jarrett Renshaw; Editing by Heather Timmons and Howard Goller)
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