The Republican Party is trying to get a major tax and spending bill done before Memorial Day. It’s chock full of President Donald Trump’s legislative priorities, and has many provisions the GOP has long been agitating for. But it’s nevertheless been a massive struggle to get the bill to the House floor for a vote. One big reason is a tax provision known as SALT — the state and local tax deduction.
I asked Today, Explained’s Devan Schwartz — who just produced the below podcast about this bill — to explain what SALT is, why it’s important, and why it’s roiled the GOP. Here’s what he had to say:
What is SALT?
SALT is an acronym that stands for “state and local taxes” — it allows Americans to deduct some of what they pay, right now up to $10,000, in state and local taxes (like property taxes and sales taxes) from their federal taxes.
Once, there wasn’t a cap to how much you could deduct, but that changed with Trump’s tax cuts in 2017; those brought in the $10,000 cap.
Removing the SALT cap is seen as benefiting mostly wealthy earners in high-tax states like California or New York: people who might make $500,000 a year or $10 million a year and pay tens or hundreds of thousands in state and local taxes, the sort of people who don’t take the standard deduction.
It’s not April; why has a tax deduction caused such a stir this week?
The SALT cap hasn’t been too popular with constituents in these high-tax states; they have been putting pressure on their lawmakers to make changes.
Trump initially expressed support for those changes, and many House GOP lawmakers from blue states ran on making changes when Republicans got back in power.
Now, House Republican lawmakers are in the middle of putting together a big spending and tax bill, and there was a push to get SALT changes in there. Those that ran on upping the SALT cap said, We’re trying to get reelected in the next year, we need a win to go back to our voters with.
The GOP leadership in the House set up a somewhat arbitrary deadline to get the bill passed from the House to the Senate by Memorial Day — that’s next week.
That puts lawmakers in a time crunch, but there’s also a numerical problem: the House GOP has very narrow margins. Depending on attendance, they can afford to lose roughly three votes on any one bill.
That gives the blue-state GOP lawmakers who want to see changes to SALT a lot of power. If you’re one of a small group, and you said, Hey, we’re holdouts, we’re not voting for this until you give us our SALT reform, you’re sinking Trump’s “big, beautiful bill.” And that’s what happened this week.
That small group of lawmakers got their way, right?
Yes. The final details could still change, but a deal was made to raise the cap.
Which set off other small groups of lawmakers who want their priorities fulfilled in the bill, and yesterday’s scramble by the White House to try to get everyone in line.
Right. Trump’s stance throughout this has been, stop whining. Don’t grandstand. It’s more important to get a deal done. So if you don’t get a SALT increase, tough luck. If they get their SALT increase, but you don’t get your thing, tough luck.
The Senate hasn’t even weighed in on the bill yet, so we’re a long way from getting changes to SALT enshrined in law. But at this point, what should we take away from the SALT saga?
SALT is inherently interesting because it’s a microcosm of the fragile political process in Congress at this time in which we often see parties with tiny minorities. Congressional leadership is more centralized than ever, but at the same time, small groups of people can really gum up the works.
It also shows how complex the Republican coalition is — the fight over SALT is really a battle between lawmakers from high-income states and those from lower-income states. We’ve seen pro-SALT lawmakers make the claim that their states’ tax base makes up a disproportionate amount of revenues, and that their constituents deserve a break because of that.
And smaller states or states with lower incomes might say, in response, we have our own needs, and we provide a lot, from farming to the numbers that power our GOP coalition.
I wouldn’t say that the fight over SALT is a fight for the soul of the Republican Party, but it’s definitely a factional fight for power.
And overall, it really shows how hard it is to actually legislate right now, in a divided Republican caucus, in a divided America.
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