Political News

State tax deduction still on chopping block, Brady says

Posted October 31, 2017 2:19 p.m. EDT

— Congressional Republican leaders still plan to get rid of the state income tax deduction in their tax plan set to drop Wednesday, the chairman of the House ways and means committee said Tuesday.

Republicans from high-tax states like New York, New Jersey and California had expressed serious concerns about killing the state and local tax deduction, a provision known as SALT, which lets taxpayers deduct levies like property taxes, state income taxes and local sales taxes.

Nixing SALT would let Republicans raise more than $1 trillion dollars to help pay for their tax plan, congressional negotiators say.

After weeks of talks with Republicans who rejected the idea, House Ways and Means Chairman Kevin Brady announced a concession over the weekend, saying they'd preserve the deduction for property taxes, which affects more middle income tax payers than the state income tax deduction.

Still, he left the door open Tuesday during an interview on Hugh Hewitt's radio program to possibly placing a cap on the property tax deduction, which would allow Republicans to raise at least some money from that end.

As for the state income tax deduction, Brady essentially threw it out the window. Hewitt asked if there would be any relief on the income side of SALT, and Brady replied: "So the answer is no."

"And here's why," he continued. "Because we have income taxes, reduced them across the board, and added the property tax, because our lawmakers in those high-tax states really believe their families are being punished most by property taxes, which aren't, look, they're not based on your ability to pay. They're just painful. ... And so no, this property tax relief is really conditioned on members of Congress from high-tax states who want to see that restored to the code."

Brady later told reporters on Capitol Hill that Republicans on the ways and means committee were still trying to figure out a way to raise the hundreds of billions of dollars that they would have raised if they scrapped the property tax deduction as planned.

"This was huge," Brady said. Asked if he knows how they're going to raise the money, he said, "some of those things we're working on, as well."

On the eve of the tax bill release, Republicans on the committee met behind closed doors to discuss what they described as some final holes in the bill. Multiple Republicans described the text-writing process as near complete but none would say it was finished.

"We've very close," Brady told reporters.

"I mean there's always last minute stuff," said Rep. Pat Meehan of Pennsylvania. "But I think we're getting there."

Rep. Pat Tiberi of Ohio insisted they were still on track to release the bill Wednesday, but he conceded "there are a few hang-ups left."