The chairman of the House tax committee warned lawmakers from high-tax states demanding relief from a $10,000 cap on the state and local deduction that they will have to settle for an “unhappy” compromise.
House Ways and Means Committee Chairman Jason Smith said Tuesday in a Bloomberg Television interview that he will strike a balance between those who want no limit on the SALT deduction and those who want no write-off at all.
“The number we’ll find will probably make everyone unhappy,” Smith, a Missouri Republican, said. “And so that means it’s probably the right number.”
Smith said there will be an increase from the current $10,000 cap in the bill. While he did not reveal his preferred solution, lawmakers have been discussing at least doubling the cap for joint filers and indexing it to inflation.
Lawmakers from high-tax states including New York, New Jersey and California are fighting for much bigger increases including $40,000 for individuals and $80,000 for joint filers.
Such a change could cost more than $800 billion over ten years however, limiting the ability of Congress to pass other tax priorities, such as eliminating taxes on overtime and tips.
“We don’t have money sitting in a jar somewhere,” House Majority Leader Steve Scalise told reporters on Tuesday.
Those pushing a large SALT cap increase say they are not backing down.
Representative Nick LaLota, a New York Republican, said five GOP lawmakers from five high-tax suburban districts are resolved to not back down on their unstated bottom line on a new SALT cap.
House Republican leaders cannot afford to lose support from more than three Republican lawmakers, unless they make concessions to Democrats — which the GOP leaders have said they would not do.
“Our strength is in numbers,” Lalota said. He told reporters that the SALT talks are far apart, on the 25-yard line with 75 yards to go.
Smith said despite a postponement of a Ways and Means Committee vote on the tax package this week, Congress is still on track to enact the giant tax cut package by July 4.
Ways and Means Committee member Kevin Hern of Oklahoma said that the committee would try to iron out its provisions behind closed doors by Friday in order to hold votes on them next week.
In a separate Bloomberg Television interview, House Budget Committee Chairman Jodey Arrington said the biggest challenge to passing the bill will be ensuring the Senate agrees to trillions in spending cuts that the House wants in the package. The Senate outline for the bill only requires $4 billion in cuts while the House is aiming for $2 trillion.
“That’s the scary piece for budget hawks like us,” he said.
