Menendez, Sanders: SALT Is For Working Families, Not Billionaires

NEW JERSEY — Are you a working family struggling with high property taxes? Then don't be duped by the latest proposals for the federal "SALT" deduction, U.S. Senators Robert Menendez of New Jersey and Bernie Sanders of Vermont say.

Property taxes are a perpetual hot-button topic for homeowners in New Jersey, which regularly ranks among the highest in the nation. For years, the state and local tax (SALT) deduction – which allows homeowners to write off taxes paid at the state and local level from their federal income tax bill – helped to soften the blow. But in 2017, the administration of former president Donald Trump passed reforms to the tax code that capped the SALT deduction at $10,000. And for many working families across the nation, including the Garden State, it was the last straw, Menendez and Sanders said Wednesday.

But there may be a way to turn things around, they added.

Speaking at a news conference, the senators gave an update on their plan to repeal the SALT cap for “middle-class families” making $400,000 or less per year as part of the reconciliation bill, while leaving the cap intact for the richest U.S. households (watch the video below).

Sanders, the chair of the Senate Budget Committee, offered some background about the recent SALT proposals on Tuesday. He wrote:

“According to media reports, Democratic negotiators are working on a repeal of the SALT deduction cap for up to five years, which would cost $475 billion and give the richest 5 percent $400 billion in tax cuts. As a result, the top 1 percent would pay lower taxes after passage of the Build Back Better plan than they did after the Trump tax cut in 2017.”

According to Menendez, a senior member of the Senate Finance Committee, the recent proposals would only provide a temporary reprieve in exchange for an extension of the $10,000 cap. He called them a “bait and switch” that won’t benefit families struggling to pay their property taxes.

“But they will benefit the millionaires and billionaires who see this as a windfall to avoid paying their fair share,” Menendez charged.

“We are convinced any SALT relief should be targeted to the families that need it most,” Menendez said. “And we are optimistic we can reach an agreement soon to solve this issue without going against President Joe Biden’s pledge on not raising taxes to families making under $400,000 a year.”

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On Wednesday, Sanders backed up his peer's stance on SALT. He wrote:

“At a time of massive income and wealth inequality, when the rich are becoming richer and working families are struggling, the job of Congress is to demand tax fairness for working families and to make certain that the wealthiest people in this country begin to pay their fair share of taxes.

“Unfortunately, in 2017, the Trump tax plan, which was supported by every Republican, moved us in exactly the wrong direction. The vast majority of the tax breaks in that proposal went to the wealthiest people in our country and the largest corporations – the people who needed it the least – and resulted in a $2 trillion increase in our national debt.

“One of the negative aspects of the Trump tax plan was to limit deductions on state and local taxes to $10,000. That resulted in millions of middle class and working class Americans being forced to pay more in federal taxes. That was a regressive and unfair proposal, and this Congress must rectify it.

“Unfortunately, as some of you may know, a proposal has been recently circulating which would completely eliminate the SALT cap. While the $10,000 cap is much too low, eliminating the cap entirely would result in a massive tax break for the wealthiest families in this country. The multimillionaires and billionaires who own mansions in exclusive neighborhoods, and who can afford to make extremely expensive purchases do not need a tax break.

“According to the Committee for a Responsible Federal Budget, a 5-year repeal, which is what some are talking about, would cost roughly $475 billion, with $400 billion of that tax cut going to the top 5% of households. According to this non-partisan organization, if this proposal were to go into effect, the top 5% would receive a net tax cut of $30 billion a year – even after including all of the other provisions to increase taxes on the wealthy that are currently in the Build Back Better Act.

“At a time when Democrats are correctly demanding that the wealthy finally pay their fair share of taxes, it would be absurd and hypocritical to provide the richest people in the country with a massive tax break.

“That’s not just Bernie Sanders talking. Jason Furman, President Obama’s chairman of the Council of Economic Advisors, recently tweeted, ‘My guess is the majority of Americans with a net worth of $50 to $300 million would get a tax cut under the Build Back Better plan with a full repeal of SALT.’ He concludes by saying ‘that’s obscene.’

“So, if completely eliminating the cap on state and local tax exemption is regressive and unfair, what is the solution? The answer is obvious. We should eliminate that cap for families making $400,000 or less, not for millionaires and billionaires. And we should make that permanent. This would not only provide tax relief to millions of middle income and working class families, it would be deficit-neutral.

“I was delighted to hear from Senator Menendez that he has a very similar perspective on this issue and our offices have agreed in principle on a compromise proposal that would eliminate the SALT cap on middle class families who need it the most and ensure that millionaires and billionaires don’t receive any of the benefit. Over ten years, this proposal would be deficit neutral and the Build Back Better Act would be fully paid for by demanding that the wealthiest Americans and most profitable corporations pay their fair share of taxes.

“We have heard reports that the House bill may include a proposal to raise the SALT cap to $72,500 for all Americans, including the wealthy. This approach would cost over $50 billion a year and would provide 37% of its benefits to the top 1%. In my view, that is not an acceptable compromise. We should be substantially increasing taxes on the top 1%, not giving the wealthiest people in America a tax break.”

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