Speier, Eshoo address SALT deduction cap

In 2017, a $10,000 deduction limit was placed on state and local taxes commonly referred to as SALT deductions. Critics of the cap say the limit targets blue states and double taxes citizens who have to pay federal taxes on earnings already used to pay local and property taxes.

Under the new administration, a group of House Democrats are demanding the cap be repealed through President Joe Biden’s proposed $2.3 trillion infrastructure package. Without the tax change, the group has threatened to withhold their highly needed votes for the plan.

Recognizing the difficulty of achieving a full and immediate repeal of the cap, Speier said she’s not yet ready to commit to withholding her vote on the bill, which she called an expensive step.

Speier is in strong support of the “once in a century infrastructure package” that she said is comparable to the national highway system under President Dwight D. Eisenhower or President Abraham Lincoln’s railroad system. Among the items listed in the plan are major improvements to roads, bridges, public transportation, ports and airports and job creation through a push to electrify vehicles.

But without the inclusion of SALT deduction modifications Speier said she’d be willing to leverage her power from the slim majority held by House Democrats by withholding her vote.

She suggested deduction limits could be made fairer for high earners living in expensive regions by raising the cap to $20,000 for citizens making less than $250,000 a year. Roughly a million Californians making between $78,000 and $130,000 annually would benefit from the change, she said.

Focusing on the Bay Area, she noted that the cost of living in the region places those earning around $100,000 a year easily within the middle class. Comparing a three bedroom, two bath home in Daly City with a comparable home in Topeka, Kansas, Speier noted the Bay Area home would be more than five times as expensive to purchase.

“People do not appreciate that we pay so much for our housing in the region but it is a fact,” Speier said. “So there has to be accommodations for the hard working middle class workers who just want to get into their first starter home and who have relied on this property tax deduction on their federal income tax. It has a profound impact.”

U.S. Rep. Anna Eshoo, D-Palo Alto, also pointed out the negative effects the cap has had on her constituents in a statement. Eshoo did not directly commit to voting for or against the infrastructure bill if SALT deductions were not addressed but shared support for repealing the cap.

“The cap on the state and local tax deduction is an assault on the middle class and a major tax increase on nearly 200,000 of my constituents who deducted an average of more than $63,000 per year prior to the 2017 Republican tax law,” Eshoo said. “The sooner we repeal it, the better, and all opportunities to do so should be considered.”

sierra@smdailyjournal.com

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