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When Orange County Rep. Young Kim, R-Calif., went to Mar-a-Lago over the weekend to meet with President-elect Donald Trump, she had SALT on her mind.
State and local tax deductions, or SALT, were capped under the first Trump administration as a part of the 2017 tax cuts at $10,000. The cap disproportionately hurts residents of blue states like California and New York, which have high property and state income taxes.
Kim, the co-chair of the bipartisan SALT caucus, said Trump told them in hindsight, he would have approached SALT differently.
“He said, ‘I’m committed to working with you. So what can we do to get this done this time around?’” recalled Kim, saying that Trump asked the group of lawmakers from California and New York if they had a specific number in mind. Kim said they are currently negotiating with the Ways and Means Committee to come up with a number.
Kim, who is co-sponsoring the bipartisan Securing Access to Lower Taxes by ensuring Deductibility Act to fully repeal the SALT cap, said that her constituents have been feeling the burden, especially middle-class families.
“Home prices in Orange County, for example, the district that I represent, the median price of a home is $1.3 million,” said Kim. “$10,000 SALT cap does not help us. It’s unfair and it doesn’t solve the problem, especially when you have home prices like that.”
Right now, Congress is preparing to negotiate a new tax bill, and Kim said any bill without SALT is a deal breaker.
“In my view, it is important that we bring relief to our constituents in California, New York and New Jersey areas. And so whatever those fixes are, it has to include SALT,” she said.
Some of the proposals on the table besides the full SALT repeal is a bill by Rep. Mike Lawler, R-N.Y., who has proposed raising the cap to $100,000 for individuals and $200,000 for married couples. Such a high cap would especially help residents facing a huge tax bill when selling their homes, as is often the case in New York and California, where housing prices have soared.
The reality of such slim margins in Congress will likely result in a compromise on the final SALT cap number, but there is also the question of whether the ongoing reconciliation package that Republicans are negotiating that includes border security, energy, and tax priorities will be split into one bill or two.
“So we are pushing for a one big package. Separating it has its merits and pros and cons,” admitted Kim, who prefers to see it all in one package in order to increase the chance of a SALT cap package. “I think the consensus is building – the importance of doing it all in one package.”
Democrats were noticeably absent from the SALT meeting with Trump over the weekend, but Kim says Republicans who attended did brief their Democratic colleagues of the SALT caucus about what was discussed.
“Getting some kind of a fix this cycle requires all of us staying together and sending the same message: We need a fix.”
Speaker Mike Johnson said he hopes to have a reconciliation package that would include a new tax bill on Trump’s desk by Memorial Day.
