U.S. Rep. Thomas Suozzi (D-LI, Queens) yesterday, April 21, ramped up the pressure on Congress and the Biden Administration to repeal the 2017 law imposing a $10,000 cap on federal income tax deductions for state and local taxes (SALT).
In a bipartisan Zoom webinar that included support from U.S. Rep. Young Kim (R-CA) and the U.S. Conference of Mayors, Suozzi who is spearheading the effort to repeal the cap, drew a line in the sand that without the repeal of the deduction, he will not support the $1.9 trillion Rescue America Plan that the Biden Administration put forward.
“I sent a letter to President Biden along with [House] members of the Ways and Means Committee that we support the American Rescue Plan, but the next big thing we do, we need you to reinstate the SALT cap. Well, we didn’t get much attention, a lot of big and bold talk we’re very supportive of the President’s policy to do a big and bold infrastructure plan. I’m sure the mayors are very supportive of that as well. But we’re saying very clearly that we must get this SALT cap repealed. No SALT, no deal,” said Suozzi, the House sponsor of legislation to repeal the SALT cap.
Suozzi, the former mayor of Glenn Cove, also pushed back against some thinking that the repeal of the tax deduction only affects the wealthy.
“We have to build up momentum and having the mayor’s support is so important to continuing that momentum to make it clear that this is affecting a couple of different major key players. Number one, it affects middle-class taxpayers. Now, some people say, oh you know somebody who makes $100,000 a year, $120,000 a year, $150,000 a year is not middle class. Well, where I am, that’s middle class,” said Suozzi.
Suozzi allowed that middle-income levels are different from downstate New York to upstate New York but not repealing the cap will hurt a husband and wife making $100,000-$150,000 a year because it’s going to stop people from moving to New York.
“It’s going to chase existing taxpayers, out of our different cities and when those people leave us, and they go to places with lower taxes, who gets left behind holding the bag, the moderate and low-income taxpayers that are there. They will either see their taxes go up to fill the gap, or their services to go down,” Suozzi said.
In New York, particularly, the cap on the SALT deduction has accelerated a race to the bottom and hurt economic output. According to the Rockefeller Institute of Government, total economic activity lost in New York as a result of the SALT cap ranges from $14.4 billion to $24.5 billion annually depending on the methodological approach used for analysis.
“Efforts to restore the SALT deduction are gaining momentum. Together, Democrats and Republicans – from the halls of Congress to local city governments – are calling for the restoration of the SALT deduction,” said Suozzi. “The cap on the SALT deduction has been a body blow to New York and middle-class families throughout the country. At the end of the day, we must fix this injustice.”