It’s crunch time for negotiations concerning the caps on state and local tax (SALT) deductions.
Following a critical meeting with Treasury Department official Scott Bescent on Wednesday, members of the SALT Caucus, accompanied by prominent GOP senators, indicated that there was “progress,” but no definitive agreements were reached.
The SALT Caucus is firm on keeping the $40,000 deduction cap established during House negotiations, although they are willing to lower the $500,000 revenue threshold and adjust for inflation, according to stakeholders.
Time is of the essence. Senate GOP leaders are aiming to unveil a “big, beautiful bill” by Friday, officially commencing the review process; however, they cannot proceed without a SALT deal.
Some lawmakers are optimistic that an agreement is on the horizon.
“We’ve made some strides and are still working through it,” stated Sen. Mark Wayne Mullin (R-Okla.), a former House member who acted as a key intermediary between the two chambers, in an interview with The Hill after the meeting on Wednesday. “I believe something will materialize by tomorrow. Hopefully. I think we are in a good position.”
Conversely, others expressed more skepticism. Rep. Nick Larota (R-N.Y.), a pivotal figure in the SALT Caucus, attended the meeting with Bescent on Wednesday and remarked that while the atmosphere was “comfortable” and “physical,” consensus remains elusive.
“Everyone wants to compromise. Everyone wants to improve the country’s direction,” Larota said. “But that seems far from what the Senate and the House are currently aligned on.”
On a positive note indicating that negotiations may be nearing their final phase, Bescent has met with Republicans twice this week, including a session with Senate Republicans on Tuesday and members of the SALT Caucus on Wednesday.
While participants were engaged in the meeting, some expressed satisfaction at witnessing increased involvement from cabinet members. Lawmakers left without proposing new policies but did refine existing parameters.
“He’s a former member and understands both my district and the SALT issue, so it’s beneficial to involve my secretary in these discussions,” noted Rep. Mike Lawler (R), representing New York’s 17th Congressional District.
When asked if Bescent’s involvement signals that a deal is getting closer, Larota responded, “I hope we’re closer today than we were yesterday.”
“He is the Treasury Secretary representing the administration on legislation that will impact the country’s financial health,” Larota added.
According to a Senate GOP aide, the White House and Marin have presented the SALT Caucus with multiple options. These are likely to retain the $40,000 deduction, while focusing on changing the revenue threshold and gradually reducing caps to ensure greater savings.
“We’ve come close to what’s needed,” said Senate Majority Leader John Tune (R-S.D.), emphasizing that discussions have been “very productive” lately. “This is one of those situations where no one will get everything they desire.”
Roller echoed this sentiment.
“Well, we’re nearing the end of the bill, right? I mean, the Senate is heading toward a vote. The President and the White House clearly want this bill to reach the finish line, so we’re approaching the conclusion here,” he commented.
Moderate House Republicans from high-tax blue states, such as New York, New Jersey, and California, have been at odds with Senate Republicans for months over SALT, with influential members vying for their interests in the chambers amidst strong opposition.
The disagreement has highlighted divisions within the $40,000 Cap House SALT Caucus that emerged after tense discussions with leadership, as the Senate Treasury Committee introduced parts of the legislation featuring a $10,000 deduction cap for individuals earning under $500,000. This cap was established in the 2017 Trump tax cuts and currently stands at $10,000.
Currently, members are working to bridge that gap. After initially shutting down the idea of lowering the $500,000 revenue threshold, “I’ve concluded negotiations,” Larota told The Hill last week when asked about potential outcomes—implying that a leading SALT Caucus member may be open to proposals if the right constraints are met.
“The Senate has made it clear. Yes, maintaining the $40,000 deduction is essential to prevent it from becoming a permanent fixture, but it appears they are reconsidering their $500,000 revenue cap,” he shared with reporters on Wednesday. “If they proceed with that, while lowering their income caps, they must also reinforce other provisions like inflation adjustments.”
“If not, that’s not a compromise,” he asserted. “If not, they’re merely imposing their preferences on us.”
Gradual changes are also being explored by GOP members in the Senate. The House GOP plan would lower the deduction cap for individuals earning $600,000 to $10,000.
Negotiations on this issue have always been regarded as challenging. Senate Republicans hail from high-tax blue states, and the SALT debate has no support in the upper chamber without advocates. The leadership in both chambers is keenly aware of these dynamics, making for a difficult negotiation that contrasts with the House GOP’s discussions.
“We’ve been transparent from the outset with our Senate counterparts that the SALT situation in the Senate is markedly different from that in the House,” said House Majority Leader Steve Scully (R-La.). “We have around 12 members who will cast their votes based on how SALT is handled. There isn’t a single Republican senator facing the same concerns.”
“Thus, we’ve had to address challenges from the start that don’t exist in the Senate,” he added. “However, if there’s a bill to pass, it must be resolved.”
Marine recently engaged in numerous discussions with key House factions, clarifying to reporters that the primary aim is not necessarily to finalize an agreement, but to achieve a state of “acceptance.”
“I don’t think either side would find that acceptable,” he remarked on Tuesday.
“Everyone holds very strong opinions on this matter,” he concluded.
Source: thehill.com