The advocates for reforms to state and local tax (SALT) deductions have often been able to garner plenty of attention for their cause, but have proven markedly less able to get their demands enacted into law.
The latest example came Wednesday evening.
A bill called the SALT Marriage Penalty Elimination Act, which would have raised the tax cap for some married filers and ease some of the burden in high-tax states like New York, was on the table in the House of Representatives. But it was rejected before it could even be formally considered.
"I'm hopeful this can be a moment of unity among my colleagues on both sides of the aisle," said Rep. Mike Lawler (R.-N.Y.), the bill's lead sponsor, as the debate got underway on Wednesday afternoon.
But — as was widely expected — it was not to be, with both Republicans and Democrats voting against the bill as it failed to garner agreement in a procedural vote.
The final vote on adopting a combined rule was rejected in a tally of 195-225, a defeat that is likely the end of the bill for the time being.
It was the latest in a trend over the last few years: A divide on SALT is evident, but not by political party. Instead, the divide is between higher-tax states, where the issue is a top concern, and other areas where SALT is not a factor and voters there are either agnostic or hostile to bringing the deduction back.
Indeed the underlying bill had bipartisan backing with Rep. Josh Gottheimer, a Democrat from New Jersey, saying before the vote that "Jersey families don't just need salt for their roads, they also need more SALT for their pocketbooks."
This week's vote came after a bipartisan tax bill was announced in January that combined a temporary expansion of the child tax credit with long-sought provisions for business. It had, in the eyes of SALT advocates, one glaring admission: Their issue wasn't addressed.
A group of New York Republicans threatened to block the bill and pushed for amendments to the bipartisan package. That didn't happen, but they relented in return for this week's vote even as observers suspected from the beginning it wouldn't have enough support to pass.
The roots of the issue
The current issue stretches back the tax bill that then-President Trump championed and then signed into law in 2017. That law cut an array of taxes, but in essence raised taxes elsewhere by capping the SALT deduction at $10,000. The widely tracked rule previously gave individual filers unlimited credit for state and local taxes as they calculated their federal returns.
The move was presented by Trump and his allies as a means to save money, but was widely seen as a punitive effort to hurt Democratic-leaning states like New York, New Jersey, and California, which have some of the highest local tax rates in the nation.
The limited bill under consideration this week was far from full restoration of the deduction. It would have simply lessened the burden on some married couples by raising the cap to $20,000 for married filers for tax year 2023 if the taxpayers' adjusted gross income is less than $500,000.
The overall SALT cap is set to expire in 2025 but advocates have now spent years trying to get it partially or completely lifted sooner.
In 2021, advocates tried to use a debate that eventually produced the Inflation Reduction Act to get their concerns addressed, but to no avail. Last October, Lawler and three of his New York Republican colleagues — Reps. Anthony D'Esposito, Andrew Garbarino, and Nick LaLota — voted against the speaker candidacy of Jim Jordan and cited SALT as one of the key reasons for their hesitancy.
Jordan ended up withdrawing his candidacy with SALT not being addressed.
Charges of a 'bailout to blue states'
Congress's SALT Caucus currently has over 30 members from both parties who represent high-tax states like California, New York, New Jersey, Illinois, and Maryland. Their goal is to restore the full SALT deduction, with today's attempt pushed by many of the members as a first step.
But the skeptical politics from the middle of the country persist. Rep. Nick Langworthy, another Republican of New York, tried Wednesday to convince his colleagues to support the rule for the bill, saying it was not a "bailout to blue states," but a sufficient number of Republicans nevertheless voted against the measure.
And many Democrats were also opposed, with Teresa Leger Fernandez, a Democrat of New Mexico, saying Wednesday that Trump and his fellow Republicans "created this problem that they now want to put a band-aid on."
She added a dig to those moderate Republicans pushing the bill. Some of them, including Rep. Lawler, could be vulnerable in 2024 as they represent districts won by Joe Biden.
"We are taking up one of the most precious resources we have in Congress, and that is floor time, for a ploy to help certain New York Republicans win their next election," she added.
Ben Werschkul is Washington correspondent for Yahoo Finance.
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