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Moderate Democrats want the $3.5 trillion spending plan to remove the limit on state and local tax deductions

  • A host of moderate Democrats say they won't support President Joe Biden's $3.5 trillion package without a repeal of the cap on state and local tax deductions, known as SALT.
  • The Democrats, many from New York and New Jersey, are angry that former President Donald Trump's tax law capped SALT deductions at $10,000.
  • A spokesman for House Speaker Nancy Pelosi says a SALT cap repeal is an "important priority in the reconciliation bill."
  • "We need to have this state and local tax deduction. We built a whole system around it," said New York Democrat Thomas Suozzi.

Rep. Tom Suozzi, D-N.Y., speaks during a news conference announcing the State and Local Taxes (SALT) Caucus outside the U.S. Capitol on April 15, 2021.Sarah Silbiger | Bloomberg | Getty Images

A fight over the cap on state and local tax deductions could prove Democrats' next hurdle in passing their $3.5 trillion budget reconciliation package.

A host of moderate Democrats — many from New York and New Jersey — have protested former President Donald Trump's 2017 tax cuts for capping how much taxpayers in their states can deduct from their federal tax obligation.

Reps. Josh Gottheimer, Mikie Sherrill, Bill Pascrell of New Jersey and New York's Thomas Suozzi say they won't support any legislation that doesn't restore the full deduction for state and local taxes, known as SALT.

"We need to have this state and local tax deduction. We built a whole system around it," said Suozzi, who since 2017 has represented parts of Long Island and northeastern sections of Queens, New York. "People are leaving our states. And when they leave, it leaves behind a hole in our revenues."

"We're in a competition with states that do not insure their children, do not pay their teachers, do not have mass transit and think that climate change is a hoax," he said. "And as a result, their costs are cheaper."

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