This week, the big fight in Congress is over the SALT cap. Since the passage of the Trump tax bill in 2017, wealthy taxpayers in higher tax states like New York and New Jersey have had a cap on the amount of state and local taxes that they can deduct from their federal tax bill. Pressured by a cadre of blue state billionaires looking to restore their tax cut, some Democratic Members of Congress are fighting to eliminate the cap as part of reconciliation, regardless of the fact that wealthy individuals are doing better than ever and the last thing they need is another tax cut.
Though this tax increase was initially cooked up by Paul Ryan and his GOP buddies as part of a blue state revenge plot, the cap is one of the few pieces of the 2017 bill that is progressive and worth preserving. Considering the current state of inequality, getting rid of it would be unacceptable. Democrats cannot, and must not, pass any tax cuts for millionaires in their reconciliation bill.
The dispute over the SALT cap repeal in the reconciliation package comes amid new Democratic infighting regarding the high-profile loss of Terry McAuliffe to Republican Glenn Youngkin in the Virginia gubernatorial race. Moderate Democrats are blaming the loss on progressives for blocking the passage of the bipartisan infrastructure bill before reconciliation (a ridiculous argument).
This week, we’re shining a spotlight on these two developments. We stress that progressives should stay strong in the fight for tax fairness, even in the face of setbacks with the SALT cap and unfounded accusations in the Virginia election loss.
Weren’t the Democrats supposed to raise taxes on the rich? By Washington Post Editorial Board
The Build Back Better Act was originally designed to make the wealthy and corporations pay their fair share in taxes, but, as the weeks go by, this goal seems less and less likely. This week, some moderate Democrats from high tax states like New York and New Jersey – Representatives Gottheimer, Pascrell, and Suozzi – have said that they won’t support the reconciliation package unless it repeals the SALT cap. Doing away with that limit entirely would provide little benefit to working and middle class Americans while instead offering a windfall for wealthy coastal donors.
Thankfully, Senator Menendez from New Jersey has publicly spoken out against repealing the SALT cap. He rightfully understands that it would disproportionately benefit the highest earners in states like his. Instead, Menendez, along with Senator Sanders from Vermont, has proposed targeting the SALT cap relief only for families that make under $400,000. This compromise, which has already been taken up by the House, seems to be the best way to get waning members like Representatives Gottheimer, Pascrell, and Suozzi on board with the reconciliation package.
Progressives bare teeth after election debacle by Holly Otterbein
Down in Virginia, progressives are being blamed by moderate Democrats for this week’s gubernatorial election loss, with moderates arguing that McAuliffe might have had more success in the race had progressives agreed to an earlier vote on the bipartisan infrastructure bill. Progressives, however, have made it clear that they are unwilling to be scapegoats for McAuliffe and his loss. They say (more credibly, in our opinion) that moderates are to blame for not taking bolder action on some of the very popular programs in the reconciliation bill. Democrats should certainly learn lessons from this election if they want to be successful in the 2022 midterms, but it’s critical they learn the right lessons.
Senator Time Kaine from Virginia is one of the moderate Democrats who appears to be blaming progressives for McAuliffe’s loss. He believes that McAuliffe might have had more success “if we had given him some things to sell,” namely the passage of the bipartisan infrastructure bill or some iteration of the reconciliation package before the election. It’s true – it’s possible that had McAuliffe had been able to sell the passage of things like paid family leave, universal pre-K, or tax hikes on billionaires (each of which would have made a significantly bigger impact than an inflated highway bill), he would have performed better. But moderates shoulder the brunt of the blame for that. It’s been progressives, not moderates, who have been fighting to keep those popular programs in the reconciliation package as well as working to get it passed as soon as possible.