[Congressional Record Volume 167, Number 113 (Tuesday, June 29, 2021)]
[House]
[Pages H3292-H3298]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
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Now, I yield to my friend from California (Mrs. Kim), who has taken a
leadership role from the other side of the aisle to talk to us about
SALT.
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Mrs. KIM of California. Madam Speaker, I thank my friend,
Representative Suozzi from New York, for yielding. And I want to thank
him for working with me in a bipartisan push to repeal the cap on SALT
deductions that is hurting American workers and families.
Californians in the 39th District--which I represent--and across our
State, have been burdened enough by high State and local taxes in
addition to high cost of living and housing. The last thing they need
is to be hurt even more because of these State and local taxes at the
Federal level.
I have heard from many of my constituents about the burdensome taxes
they have to pay as a result of the SALT cap. These are workers,
business owners, and families who are struggling to survive due to the
COVID-19 pandemic. It is estimated that in the 2022 tax year,
California's 39th District will pay on average $600 million more in
taxes.
In 2018 alone, Californians paid an additional $11.2 billion in
Federal taxes because of the SALT cap. That translated into 55,000
fewer jobs and a loss of $3.4 billion in wages.
Assuming a middle-of-the-road rate of 25 percent, an average taxpayer
who claimed itemized deductions would have saved $6,521 in taxes if the
SALT deduction were not capped at $10,000. These high tax rates are on
top of the skyrocketing housing prices across the State. In fact,
according to the National Association of Realtors, the median price for
a single-family home in California has increased by more than 39
percent in the past year alone, surpassing the $800,000 threshold for
the first time in April of this year.
That is why it is a top priority of mine in Congress to make life
more affordable for Californians and repeal the SALT cap. This is
hurting my constituents and many middle-class Americans across the
Nation.
I was proud to join my friend, Representative Suozzi, as an original
cosponsor of the SALT Deductibility Act. This bill would simply repeal
the cap on SALT deductions and send a message: No more to burdensome
taxes, and yes to our families keeping more money in their hands.
I am also proud to serve as co-chair of the bipartisan SALT Caucus as
we continue to work together to repeal this cap and help lower taxes
for my constituents and businesses.
I will continue to do all I can to deliver results for California's
39th District. I thank Representative Suozzi for organizing this
Special Order and for his leadership to repeal the SALT cap.
Mr. SUOZZI. Madam Speaker, I appreciate Congresswoman Kim so much and
thank her for being here this evening.
You have been hearing about the SALT cap and the effect on your
constituents. Have they been talking to you about this a great deal?
Madam Speaker, I yield to the gentlewoman from California (Mrs. Kim)
for the purpose of a colloquy.
Mrs. KIM of California. Madam Speaker, on a regular basis we have had
townhalls and we have had regular meetings throughout my business
roundtable discussions, and they brought this issue up over and over.
Mr. SUOZZI. And are people talking about leaving the region because
of the effect of the taxes? I yield to the gentlewoman.
Mrs. KIM of California. In the last several years we have had many
thousands of Californians leaving to other States like Texas, and I
have to literally go over there to meet my friends and listen to these
problems. So, yes, this is a major issue, and I will continue to work
with the gentleman to repeal the SALT cap.
Mr. SUOZZI. Madam Speaker, I thank Congresswoman Kim for her
comments.
At this time, I yield to the gentleman from New Jersey (Mr.
Pascrell), who has been a real leader on the issue of SALT, and who has
been outspoken ever since 2017 on this issue. We are grateful to him.
Mr. PASCRELL. Madam Speaker, I thank Mr. Suozzi for yielding.
When talking about the SALT deduction, we are not griping about
something that came about yesterday. The SALT deduction goes back to
the Civil War. We are talking about 150 years of history when President
Lincoln had to fund a brand-new army to crush the traitor States in the
South. So we must use the 150-year history as a baseline for our tax
policy when discussing reform.
It is not low-hanging fruit as it was in 2017 when they looked for
the money for the false tax cuts and they got slammed out of office in
2018. Go to the facts.
Abe knew what he was doing, how it took money away from the States.
They couldn't build hospitals. They couldn't build schools. They
couldn't build roads. He knew what he was doing. The States needed
money, too.
Republicans targeted blue States. They bragged about it. I couldn't
believe it. I couldn't believe my ears when I heard them on the floor
of the House openly admitting it. They made no qualms about it. They
targeted these blue States when passing their 2017 tax scam. Talk about
a hoax. They bragged about it.
Its motivations alone are disqualifying, but its impacts are worse.
SALT was a lifeline to the middle class. Despite half-truths and
outright falsehoods, SALT is about the middle class, and if you can't
stand up for the middle class, you shouldn't be here.
In 2017, 42 percent of the Jersey taxpayers, nearly 2 million people,
deducted their State and local taxes, averaging over $19,000 per
household. That is a $9,000 increase in taxes. Those phonies did it.
That is why they got smashed in 2018.
More than 81 percent of those who deducted SALT earned less than
$200,000. Naysayers claim this deduction only benefits the well-off.
They do not recognize the cost of living in our States. The same people
who voted for the tax cuts that helped the 1 percent, the 1.5 percent,
they felt badly about the rich people who--one clown who went to jail
in New York State, before he went, he said that we had to take care of
our donors. He said it. I didn't. I mean, he didn't go to jail for
saying that. He played the stocks.
Middle income in New Jersey is not the same as Oklahoma or South
Dakota. Housing, food, childcare, and transportation costs are much
lower there. Our middle-class taxpayers are the pack mules of the U.S.
tax system, and as one of our brothers from New Jersey would say, we
are tired of being the lackeys for these other States. Look who is
paying Federal taxes.
Our middle-class taxpayers will no longer sit idly by. This cap
dumped even more weight on the backs of my constituents in my district,
the Ninth District of New Jersey. I appreciate the growing recognition
that relief is needed.
Senator Sanders' budget draft is an important step in the right
direction. But we have got to think big. We demand relief now for our
States and our middle-class constituents. They are the backbone of the
Biden administration's coalition. Just last week, we stood shoulder to
shoulder with working-class firefighters, police officers, and teachers
who support our SALT demands. Our urgency is absolute.
We won't allow our neighbors' pay to be taken for granted. I will
close with just four words: No SALT, no deals. And I will close by
saying that Abraham Lincoln, one of the greatest Presidents in the
history of the country, a true patriot, he stood behind the middle
class. He knew what the States went through.
This is the oldest deduction on the books, and they have criminalized
it. And if anything I reported here is not right, I hope they stand up
and say that it is not right. I have got the other facts here. What
other facts are you talking about?
Mr. SUOZZI. Well, I thank Mr. Pascrell very much for his comments. I
wanted to mention that the gentleman served as the mayor of his
hometown. I yield to the gentleman.
Mr. PASCRELL. Yes, I did.
Mr. SUOZZI. And you talk about President Lincoln when the Federal Tax
Code was first adopted, and the idea was that we didn't want the
Federal Government stopping local governments and State governments
from being the laboratories of democracy.
Mr. PASCRELL. That is right. It is a fact of life, yes.
Mr. SUOZZI. And so they put a deduction in place for State and local
taxes so that State and local governments could govern the way they
wish.
Mr. PASCRELL. And they could build the hospitals and the schools and
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the roads. Where were they going to get the money if the Federal
Government took all of the money to fight the war?
Mr. SUOZZI. Madam Speaker, I know that the gentleman has always been
a strong proponent for law enforcement, for the firefighters, and
public safety officials, and they are very dramatically negatively
affected by this. Is that right?
Mr. PASCRELL. Yes. And many of the first responders came out and
supported this bill last week.
Mr. SUOZZI. Madam Speaker, I thank Mr. Pascrell very much for his
comments.
I yield to the gentlewoman from California (Ms. Eshoo), a good friend
and a leader, not just on this issue but in Congress.
Ms. ESHOO. Madam Speaker, I thank the gentleman for yielding to me
and certainly for his wonderful leadership on this issue.
Anyone that is tuned in this evening from across the country is
hearing a lot of passion spilling over at the podiums here, and for
very good reason. In 2017, despite the opposition of every single
Democrat in the United States House of Representatives and some
Republicans, Congress passed a tax law that bulldozed the State and
local tax deductibility. This hurts a lot of people.
Now, that was close to a $5 trillion package and so why was this
bulldozed? They went through the Tax Code looking for things that were
deductible to lower the price tag of a highly inequitable tax package.
And the SALT deduction, as it is known, was then capped at $10,000 for
both individuals and then for married couples filing jointly.
I viewed this then, as I do today, as an assault on the middle class
of our country. It was one of the main reasons that I voted against the
2017 tax law. Now I think that if you ask the question of 435 Members
of the House: Do you support the middle class? They would all say
``yes.'' But the Record shows something else.
We know that everyone aspires to get into the middle class, and we
know that the middle class, as my father always used to say, is made up
of extraordinary, ordinary people who are the backbone of this country.
And that is why this policy is so wrong and it is so hurtful.
This is a very important deduction for the middle class. Middle
class, you file long term, and you have four areas that you can deduct:
mortgage interest deduction, charitable contributions, healthcare
expenses, and State and local taxes. And they wiped that out.
Now, you tell me whether that is fair or not. I don't think so. And I
don't think people across the country do either. Capping the SALT
deduction affects nearly 200,000 families in my congressional district.
I am not talking about the whole State of California. I am talking
about California's 18th Congressional District, and it has raised taxes
on over a million households in the State of California. Prior to this
harmful cap, my constituents--hold on to your seats, hold on to your
hats--deducted an average of $63,083 in State and local taxes. Wiped it
out.
Some have unfairly, I think, maligned the SALT deduction as a benefit
for the wealthy. I think it is an essential deduction for taxpayers in
high-cost, high-tax States like California. And that has been spoken to
earlier. That is a very important legitimate case to be made. In the
bay area, the beautiful bay area of California, northern California,
the cost of living is really very expensive, and it keeps going up.
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And it is so high that the Economic Policy Institute estimates that a
family of four needs to earn more than $100,000 to earn a modest but
adequate standard of living. That is simply a fact.
So prior to the law, more than 3 million households in California
with an income of less than that annually claimed this deduction, as
did nearly one-third of taxpayers nationwide.
This evening, I think each one of us can outline why this is wrong;
why the deductibility needs to be restored. Congress needs to reform
our tax code. And when we do, so should the restoration of this
deductibility be restored.
Why?
Because, again, the middle class is the backbone of America. We
should not be assaulting them. We should be assisting them.
Madam Speaker, I thank the gentleman for leading this effort this
evening. It is a worthy one.
Mr. SUOZZI. Madam Speaker, I thank the gentlewoman for her leadership
on this and for being such a fierce advocate for the middle class.
I now introduce a good friend of mine from California, who really had
a district that was devastated by COVID. People lost their jobs at one
of the greatest entertainment facilities in the country, and now he
wants to tell us about how SALT is affecting his district.
Madam Speaker, I yield to the gentleman from California (Mr.
Carbajal).
Mr. CARBAJAL. Madam Speaker, I thank the gentleman for yielding.
The gentleman is right, Madam Speaker, COVID really devastated my
community, but, more importantly, SALT also landed a devastating punch.
This issue is about proud Californians who pay more than their fair
share of Federal taxes. It is about equity for fellow Americans, like
Californians, and other States like California.
California today is still the largest State in the United States in
terms of population and economic activity. For years and years,
California has been a net donor State to the United States. Let me
repeat. For years and years, California has paid more Federal dollars
than it gets back from the Federal Government.
We Californians work hard. We live in a State that generates
tremendous economic activity, and we have a very high cost of living.
And we pay more--we pay more than our fair share of taxes proudly. As
Americans, we pay our Federal taxes proudly.
So I ask why? Why is the Federal Government not being fair to States
like California?
So why do we randomly have a law that arbitrarily caps our State and
local tax deductibility on our Federal taxes?
This SALT cap hurts. It hurts my friends and neighbors. It hurts
middle-class families in California. In my State, the average price of
a home, a used house, middle class, is now close to $800,000.
So why would we make it more difficult, more expensive for a middle-
class family to buy a home?
I say to all of you, both sides of the aisle, let's be fair and let's
be equitable to the middle class in this country. Join me in thanking
States like California for paying more than their fair share of Federal
taxes. Join me by eliminating the SALT cap, that is deductibility of
local taxes on the Federal return.
And I say to you: No SALT deductible, no deal.
Mr. SUOZZI. Madam Speaker, I just want to--some people, when they
hear you talk about this, and they hear a home worth $500,000,
$600,000, $700,000, $800,000, they think, boy, that person must be
really rich.
What they don't seem to understand is that in my State, in your
State, and many of the States represented here, those are actually
middle-class home values.
Mr. CARBAJAL. That is a starter home.
Mr. SUOZZI. So we have to recognize that the country is not the same
all over. If you make $150,000 in your household, you are in the top 20
percent of the income earners of the country.
However, if you make $150,000 in your district or my district, you
are not a rich person. If you make $150,000 in Oklahoma or in Iowa or
North Dakota, you may be a wealthy person. So we have to recognize
these regional differences.
People say: Well, why should we be subsidizing what you are doing?
And the gentleman points out so clearly in what he just spoke about
that we are, in fact, in our States, subsidizing the rest of the
country. We are net donors and they are net takers.
Mr. CARBAJAL. We pay more than our fair share of Federal taxes year
after year.
Mr. SUOZZI. I thank the gentleman for being such a fierce advocate.
Madam Speaker, I want to travel across the country from California
now
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to New Jersey, to another fierce advocate; someone who served in the
U.S. military as a Navy helicopter pilot for 5 years both in the Middle
East and in Europe; someone who has been one of the fiercest advocates
for the reinstatement of the SALT deduction.
Madam Speaker, I yield to the gentlewoman from New Jersey (Ms.
Sherrill).
Ms. SHERRILL. Madam Speaker, I am proud to be rising today alongside
so many of my colleagues to declare loudly that the time has come to
finally address the State and local tax deduction cap for families that
have been slapped with this double tax for 4 long years.
In States like New Jersey, we pride ourselves on making the
investments necessary to sustain our top-tier public schools, invest in
infrastructure and open spaces, and support a prevailing wage for our
unions. That is why people move to my State. That is why families stay
for generations.
But when the SALT deduction cap imposed by the 2017 Trump tax bill
instituted, our ability to keep making those key investments was
threatened.
The SALT deduction cap affects residents in every corner of my
district. It impacts families made up of teachers, first responders,
and public servants.
For my constituents and millions of taxpayers throughout the country,
the bottom line is you don't have to be a millionaire to be impacted by
SALT. The simple fact is that it has imposed a harmful double tax and
has created one of the largest marriage penalties in the Federal tax
code.
With the SALT cap in place, States and localities face increased
pressure to cut back on important investments in priorities like
education, prevailing wages, infrastructure, environmental protections,
and services for seniors. Those investments became harder to make when
the Federal Government decided to tax New Jersey families twice. This
means that more New Jerseyans' money is going to the Federal
Government, instead of being invested in our local communities.
The result will be less spending over time on these priorities, which
would be a detriment to ensuring our economy works for everyone.
I have been fighting since my first day in office to repeal the SALT
deduction cap. I have helped secure passage of a repeal twice in this
very Chamber. And I feel confident that so many of my colleagues
understand this issue and why it is critical that we repeal it; largely
because of the work and advocacy of the Members who are speaking here
tonight.
But we need to keep up this fight for our constituents. As we head
into crunch time on infrastructure negotiations in Congress, now is the
time to deliver relief for families across New Jersey and States around
the country that are disproportionately impacted by this harmful double
tax.
Last week, I launched an initiative back in New Jersey, declaring it
the Summer of SALT, to make it clear that we will do everything in our
power to make it happen. There simply isn't another option for New
Jersey families.
Mr. SUOZZI. Congresswoman, you have been an amazing advocate. You
mentioned in your remarks at the end there about this being a double
tax. Can you tell us a little bit about that?
Ms. SHERRILL. Sure. So as you know, the people in my district pay
State and local taxes, and that is what funds our great public school
system. New Jersey has the best public school system for 2 years
running in the Nation; types of things like that, services that our New
Jersey families care so much about. And now the Federal Government is
taxing that money. So you are getting taxed twice in New Jersey, to
really put downward pressure on our ability to fund those great public
services.
Mr. SUOZZI. So you are getting taxed on the taxes you have already
paid.
Ms. SHERRILL. Exactly.
Mr. SUOZZI. So if a family makes $100,000 in your State, and they
have to pay $20,000 in taxes, between their property taxes and their
income taxes, that leaves them with $80,000 of that income.
However, if they are in a low tax State where they don't have as good
services, they start with $100,000, but they only pay $5,000 in State
and local taxes, they have got $95,000 left in income.
Ms. SHERRILL. Yep. Exactly.
Mr. SUOZZI. But they are being taxed the same at the Federal level.
Ms. SHERRILL. And now not able to deduct that.
Mr. SUOZZI. Madam Speaker, now I want to go across the aisle again to
Congresswoman Michelle Steel from California, who is also being
accosted by her constituents. They are talking to her about the fact
that they need the SALT deduction back.
Madam Speaker, I yield to the gentlewoman from California (Mrs.
Steel).
Mrs. STEEL. Madam Speaker, I thank Congressman Suozzi for leading
this important tax matter. It is very important to our constituents.
Taxpayers in California's 48th Congressional District, which I am
proud to represent, were responsible for 19.8 percent of all SALT
deductions in 2018.
The average SALT deduction lost in my district was $28,532. In a
place like Orange County, where we already pay some of the highest
taxes in the country, this cap takes more money from hardworking
families.
There were great improvements made in the 2017 tax reform law, like
simplifying the tax code and making the corporate tax rate more on par
with other nations. But it also chose winners and losers; and,
unfortunately, those in high-cost-of-living States, like in New York
and California, are paying the price.
This is a bipartisan issue because we know how much this affects
hardworking families in these high-cost States. I do think we can make
progress on this, but not at the cost of raising taxes on Americans and
American businesses, especially at a time when we are working to
rebuild our local economies and get businesses back open.
This is a bipartisan issue. We can't muddy the water by adding it to
partisan legislation that will pass on party line only. I don't want to
see additional tax gimmicks come before Congress. I want the deduction
back on the table.
I am proud to support two pieces of legislation that would fully
repeal the SALT cap. One bill by my fellow Californian, Mike Garcia;
and the other one by New York Congressman Thomas Suozzi.
Our constituents should keep more of their hard-earned money. It
belongs to them, not the Federal Government.
I am proud to join my colleagues on both sides of the aisle to
continue calling for a repeal of the SALT cap.
Mr. SUOZZI. Congresswoman, thank you so much for being here tonight
and for speaking out on this very important issue. We are grateful for
your presence here tonight.
Madam Speaker, at this time I would like to go to the middle of the
country, to the State of Illinois, where my good friend who serves on
the Ways and Means Committee really is one of the brightest minds in
Congress today, who wants to speak to us about the SALT deduction and
its effect on his district.
Madam Speaker, I yield to the gentleman from Illinois (Mr.
Schneider).
Mr. SCHNEIDER. Congressman Suozzi, I am grateful for you holding this
Special Order. I am grateful for your friendship in Congress and the
work we do together on many things, but, in particular, on our efforts
to repeal the onerous cap on the SALT deduction.
In 2017, the Trump administration raised taxes for middle-class
families in Illinois and across the country by capping the State and
Local Tax deduction at $10,000.
The decision was both bad policy and bad politics. Capping the SALT
deduction raised the tax burden for Illinois working families and small
business owners.
In the 10th District, my district, 42 percent of families rely on the
SALT deduction. Statewide in Illinois, one in three taxpayers file
using the SALT deduction affected by this cap.
And this deduction is not a tax break on the wealthy. Eighty-five
percent of Illinois filers who take the SALT deduction are middle-
income individuals and families.
I have heard from constituents, and some of them want to move out of
Illinois because their taxes are simply too expensive. I see everything
our communities have to offer, from our schools, our parks, our public
places, communities that make a difference and make a great place to
raise family; and it
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breaks my heart that someone would choose not to live in the 10th
District just because of an unfair decision made to increase the tax
burden to punish States like Illinois.
The SALT cap also makes it harder for our cities to provide essential
services, like police departments, fire services, fire protection
services, libraries and public health. These services and the workers
performing them are the backbones of our community. The pandemic has
already strained their budgets, and we do not need to strain them any
further.
Finally, it is no accident which States are most affected by the SALT
cap. These are the States most affected: Illinois, New York, New
Jersey, and California.
These States have made the decision to invest in their communities,
to invest in their people. They have invested in their children, their
schools, their infrastructure. We should not be double-taxed just
because we have decided that we want to continue to pay to make our
communities stronger.
Reinstating the full SALT deduction is a decision about fairness and
responsibility. A Federal tax on income already paid to State and local
governments is, quite simply, double taxation. We have the
responsibility to stand up for our families, our small businesses, and
our communities.
{time} 2015
We need a tax system that is fair, lifts our Nation, and gives our
children the future that we all want them to have. It is critical that
we reinstate the full SALT deduction and reduce the tax burden for
middle-class families across the country.
Mr. SUOZZI. Congressman, I want to thank you so much. You hit on the
topic of fairness so many times. Many of our States and our local
governments have relied on this deduction for literally a hundred
years, and it was suddenly taken away in 2017. It has had a dramatic
effect.
Can you briefly touch on fairness one more time?
Mr. SCHNEIDER. Absolutely. As you know, when the income tax was put
in place more than 100 years ago, it was a decision that communities,
that States that decided to invest in their people, would not be double
taxed.
Yet, in 2017, the decision of the Republicans was to specifically
attack these States, these blue States like Illinois and New York. It
is unfair to these communities that are investing in schools, public
services, fire departments, police departments, making the decision to
responsibly pay for them, and then have their residents told they have
to pay a second time with the Federal tax.
To add on top of that, these are the States, like New York and
Illinois, who pay more to the Federal Government than they get back. So
not only are we getting double taxed, we have a burden of subsidizing
the States that are attacking us now.
So this is absolutely unfair. It is unfair to the States. But, more
importantly, it is unfair to the families we represent.
Mr. SUOZZI. Thank you, Congressman. It really galls me sometimes when
I hear people boasting about the fact that they are leaving our States
and moving to other States, when, in fact, we are subsidizing the rest
of the country with our tax dollars. Thank you so much for your
leadership on this issue. We are very grateful.
Madam Speaker, I yield to the gentlewoman from California (Ms.
Porter), one of the most progressive Members of the United States
Congress, and also one of the great intellects who has been so
passionate about this issue and has some very interesting things to
share with us.
Ms. PORTER. Madam Speaker, I am here today to champion tax fairness
for every American across the country, across parties, and across the
aisle. We are here tonight to talk about what does it mean to have a
fair tax system.
Since coming to Congress, I have repeatedly heard from my
constituents about how the Trump tax bill doubled the taxes they owe
due to an arbitrary cap on allowable State and local tax deductions,
often called SALT.
In the last year before this arbitrary $10,000 cap was imposed,
nearly two in five taxpayers in my district claimed the SALT deduction,
and their average deduction was $22,000 per household. They were paying
an average of $22,000 in State and local taxes.
Capping the SALT deduction created double taxation on those families,
and it penalized millions of middle-class families--Republicans,
Democrats, and Independents alike--based solely on the State where they
live.
It is an unfair Federal tax system to penalize people based solely on
their State of residence, yet that is what this arbitrary SALT tax cap
does.
Given the rising cost of housing, prescription drugs, college, and
childcare, every dollar counts for American families and families in
Orange County. This is especially true after a year of financial
hardship during which millions of families across the country are
struggling to stay afloat.
Madam Speaker, I urge my colleagues across the country and across the
aisle to restore the State and local tax deduction to create a fairer
tax system for every American.
Mr. SUOZZI. Congresswoman, I ask you, please go into it a little bit
further about this concept of double taxation. We have heard it several
times here tonight. Just explain what you mean by double taxation.
Madam Speaker, I yield to the Congresswoman for a colloquy.
Ms. PORTER. The basic principle of an income tax is that you are
taxed on the money that you have available to purchase things, to
purchase goods and services, to invest, to save. You are taxed on that.
That is what a progressive system of taxation means.
When you are having taxes taken out of your paycheck, or you owe
taxes to your State and local government, you do not have that income
left over.
So let's use an example. If someone earns $100,000 and they pay, as
is typical in my district, $20,000 in State and local tax, that is not
optional. They must pay that $20,000 under the law. What they have left
to provide for their family, to save for college, to pay for housing,
to do other things, is $80,000. That is the amount of income that the
Federal Government should tax.
What the SALT cap does is say to the family earning $100,000: You can
only deduct $10,000, a completely arbitrary number.
What that does is say to a family that only has $80,000 left because
they had to pay the county, they had to pay the city, they had to pay
for fire services and school services. And they pay that money because
they are proud of their community and they want our communities to
thrive. But then they are taxed as if they have $90,000 available to
them, but they don't. They only have $80,000.
So this whole idea of capping the State and local tax deduction is
completely contrary to the entire basic theory of an income tax, which
is you pay tax on your available income. If you owe money to the State
and county government, whether it is for property tax or State or city
taxes, you do not have that money left.
In effect, these families are being asked to pay money and find money
they do not have relative to their peers in other parts of the country.
That is simply an unfair tax system.
Mr. SUOZZI. It is very important, Congresswoman, what you point out.
This is a mandatory payment. You are not spending the money to go on
vacation; you are not spending money to go out to dinner; you are not
building an addition onto your home. This is a mandatory expense that
you must pay, as you said, to your county, to your village, or to your
State. That is no longer available to you.
In other States where the overall income is exactly the same, but the
mandatory taking is much smaller, the tax bill is not as burdensome.
Ms. PORTER. That is right. So the State and local tax deduction is
really about saying that two families in two different States, trying
to support themselves on the identical amount of income, ought to owe
the same amount of Federal tax. That is what we are here to champion
today.
I am proud to be doing it with colleagues from across the country and
across the aisle.
Mr. SUOZZI. Congresswoman, I want to thank you so much for being
here. We have had some Republicans across the aisle here tonight. We
have had some moderate Democrats here tonight. And we have progressive
Democrats, such as yourself, here.
I think it is important that we point out that actually the SALT
deduction
[[Page H3297]]
is in keeping with progressive policy, because it supports those States
that want to promote progressive policies within their States.
Ms. PORTER. That is right. Because cities and counties depend on the
resources from State and local taxes to be able to pay for schools, to
do a good job educating every single child, to make investments in
roads and bridges, to pay first responders fair wages for putting their
lives on the line to protect us.
These are the kinds of policies that progressives champion, and we
cannot ask our cities and our States and, most importantly, our fellow
Americans to make those kinds of investments on the city, county,
village, and local level, and then have the Federal Government treat
them unfairly solely because they are trying to do right by each other
in their community.
Mr. SUOZZI. Congresswoman, thank you so much. We really appreciate
you being here this evening to talk about this.
Madam Speaker, I yield to the gentleman from New Jersey (Mr.
Gottheimer), back across to the other side of the country, one of my
neighbors and good friends who serves as the chair of the Problem
Solvers Caucus. He has been one of the strongest advocates for the
reinstatement of the SALT deduction and the repeal of the SALT cap.
Mr. GOTTHEIMER. Madam Speaker, we are here today representing tens of
thousands of middle-class families, like those back in my home district
in northern New Jersey, who got whacked with the 2017 tax hike bill,
which gutted our State and local tax deduction with the disastrous
$10,000 cap.
It is high time that Congress and the rest of the country heard just
how badly these hardworking families have been hurt by the SALT cap. It
is something I know we heard about a lot tonight, and I really want to
thank my dear friend Tom Suozzi for his excellent leadership on this
issue.
The usual naysayers continue to try to undermine our efforts to
reinstate the State and local tax deduction, or SALT, by claiming it is
just a giveaway to the wealthiest Americans. But anyone who actually
lives in my district in northern New Jersey knows that the $10,000 cap
has hit middle-class families hard, many of whom are already struggling
with high costs.
It has also caused residents and jobs to leave our State. And now,
with a declining tax base, it's threatening our best-in-class schools,
teachers, law enforcement, firefighters, and our State's services for
hard-pressed families.
The cap on the State and local tax deduction does not solely impact
the highest earners. It has also increased taxes on scores of middle-
class families, as I said. It is a very important point to understand.
In Bergen County, which is the largest county I represent, for
instance, before the cap was put in place, the average SALT deduction
was above $24,000 a year. Put another way, a married couple in Bergen
County, a teacher and a law enforcement officer making a typical
salary, could have had a SALT deduction of more than $17,000.
According to reporting from New Jersey's Star-Ledger, if we
reinstated the State and local tax deduction, nearly one-third of New
Jersey residents, almost 3 million people, would get tax relief. Yes,
they would get a tax cut they so desperately need. As many as 80
percent of them had incomes of $216,000 or less.
Again, that is a firefighter and a teacher. That is hardly the 1
percent, especially in a high-cost-of-living area like New Jersey. I
know the same thing is true of California, like we heard about from
Katie Porter, or Tom Suozzi's district in New York.
We know that when taxes goes up, it leads to an exodus of middle
class and higher earners in State likes ours. In fact, according to
United Van Lines, ever since the SALT cap, New Jersey has been the
number one out-migration State in the entire country. New Jersey is
losing its highest earners, and the disproportionate taxes they pay, to
States like Florida, North Carolina, and Texas. That has only been
exacerbated during the pandemic.
The SALT cap is literally draining the tax base out of States like
New Jersey that offer far better schools and government-supported
services to middle- and lower-income families than our counterparts in
other parts of the Nation.
For instance, I mentioned $15,000 is the median property tax in
Bergen County, New Jersey. If you go to Mississippi, their median
property tax is $550 a year.
The New York Times editorial board even once reiterated this point
that I am trying to make, where we have good services for hard-pressed
families in States like mine and other State I mentioned, like
Mississippi or Alabama, don't have the resources to offer those kinds
of services.
So The New York Times editorial board made this point when they said
that States like New Jersey and New York ``generally do a better job of
providing for the health and welfare of their citizens, and are more
willing to pay for institutions that are good for society as a whole.''
This is the difference between States like ours and moocher States
like Mississippi and Alabama that tend not to give back to the people
they represent.
Thankfully, there is real bipartisan work taking place here in
Congress to reinstate the SALT deduction, to get more money back in the
pockets of Jersey middle-class families, and to help stop residents
from moving out and eroding our State's tax base.
Along with Congressman Suozzi, I have helped introduce the SALT
Deductibility Act, a bipartisan bill to fully restore the deduction.
In the SALT Caucus, with Congressman Bill Pascrell, who spoke
earlier, we are working in a bipartisan way with more than 30 Members
to find a way to get this done in Congress and to actually get tax
relief for the middle-class families we represent. I am very proud to
co-chair that bipartisan caucus.
This tax cut of reinstating SALT can be a win-win for everyone. Let's
get the SALT deduction fully reinstated so that millions of Americans
and families nationwide can finally get some relief.
Working together in a bipartisan way, I believe we really can get
this done so that our best days are always ahead of us.
Mr. SUOZZI. Congressman Gottheimer, thank you so much for pointing
out all of those important points.
I want to go back to one thing that you have mentioned here tonight.
We have heard from Senator McConnell and from others the concept of a
blue State bailout, the idea that the SALT deduction is some sort of
advantage for blue States. But you talked about how your State is
actually a net donor to the Federal Government.
Could you tell us a little bit more about that?
Madam Speaker, I yield to the gentleman for a colloquy.
{time} 2030
Mr. GOTTHEIMER. Madam Speaker, I would be happy to.
One of the biggest challenges people don't realize for States like
New Jersey, New York, Connecticut, and California is how much our
taxpayers pay into the Federal Government and, historically, how we get
back less in return than some of the other States in the country do.
For instance, for every dollar that Mississippi sends to the Federal
Government, they get $4.38 back. Alabama, I believe, receives $4.32
back. The State of Louisiana starts its budget every year with half
coming from the Federal Government.
States like Jersey, we get back 67 cents, historically, on the
dollar.
What does that mean? It means that we pay lots of money to
Washington. People like me are fighting to claw more back to Jersey,
but we know that other States benefit more.
When the tax hike bill passed in 2017, and the red States gutted the
State and local tax deduction, capping it at $10,000, what they did was
shift actually even more of the tax burden over to blue States like
ours, and the red States benefited even more.
It just reiterates, even more, the importance of actually reinstating
the State and local tax deduction, not only because, as Katie Porter
said, it is double taxation and not only because it has been around
since 1913 or even before for exactly this purpose. It is because we
recognize that some States pay more than others, and we have to find
ways to balance that out. Otherwise, we are going to keep losing people
from States like ours to States like Florida and other red States.
[[Page H3298]]
Frankly, that is why it is so important that we fight back to get tax
relief for the people that we represent, to make sure they can afford
to live in our States and that we have a good tax base to be able to
have great schools and stand by law enforcement, firefighters, and
others.
Mr. SUOZZI. Madam Speaker, Mr. Gottheimer has been a great champion
on this issue. I am grateful to him for pointing that out.
I know, in the case of my State of New York, in the past 5 years, New
York has sent $150 billion more to the Federal Government than they
have received back in Federal services or Federal contracts, whereas
Mitch McConnell's State in the past 5 years, this same period, they
have received $150 billion more in services and contracts than they
have put back into the system.
The gentleman's advocacy on this issue has been stellar. I am
grateful to him for being here tonight.
Mr. GOTTHEIMER. Madam Speaker, I thank Congressman Suozzi for putting
together this Special Order hour.
Mr. SUOZZI. Madam Speaker, I appreciate the time that my colleagues
and I have had tonight to make these different points.
I want to close by saying this is about fairness. It is not fair.
It is not fair that the State and local tax deduction has been in
place for over 100 years so State and local governments have relied on
this deduction in order to fund the programs that we have.
It is not fair that people are being taxed on taxes that they have
already paid.
It is not fair that the taxes that are being paid in these States are
no longer deductible on people's income tax returns.
It is not fair that, after all these years of relying on this
deduction, it is no longer in place, and my colleagues on the other
side of the aisle have been boasting about people leaving my State and
going to their States while we are, in fact, subsidizing those very
States.
This is a battle that is going to continue. Hopefully, over the next
few months, we will be able to build a coalition, together, of
Democrats and Republicans who recognize that this unfairness has to be
addressed and that we need to restore the State and local tax deduction
for the benefit of the residents of my State and people throughout the
United States of America who are relying on basic fairness.
Madam Speaker, I yield back the balance of my time.
Mr. CICILLINE. Madam Speaker, I rise today in support of ending the
cap on State and Local Tax deductions--better known as the SALT
deduction.
For more than 100 years, an idea dating back to Abraham Lincoln, the
SALT deduction has allowed families to deduct taxes already paid to
state and local government from their federal tax returns.
Many middle-class Americans benefit from this commonsense tax policy
every year. In past years, almost a third of Rhode Islanders have
claimed the SALT deductions, including almost 60 percent of people in
my district who make between $75-100,000 per year.
The destructive 2017 Trump tax cuts, however, imposed a $10,000 cap
on SALT deductions, meaning that if a family pays more than $10,000 in
state and local taxes, the taxes paid in excess of that $10,000 can no
longer be deducted from federal returns raising those families' tax
liability significantly.
It just doesn't make sense to have Americans, especially middle-class
families living in states with high tax rates, pay extra taxes on the
taxes they have already paid.
Most middle-class Americans living in high tax areas are there so
their children can go to high caliber public schools or receive better
programs.
Many of them made 10, 20, and 30-year investments in home ownership
in these high tax areas, relying on the SALT deduction that had been in
place for more than 100 years when budgeting for this big expense.
Then they had the rug pulled out from under them and were told they
were suddenly liable for thousands of dollars more in taxes per year.
For many of these people, that extra tax is a significant portion of
their annual income.
These Americans are working hard to give their families the best life
possible. Putting a secondary tax on the taxes they have already paid
will force many middle-class Americans to struggle.
In fact, middle-class Americans have said that the SALT Cap will,
quote: ``wipe them out'' by forcing them to pay those extra federal
taxes in addition to state and local.
This is why I cosponsored H.R. 613, the SALT Deductibility Act, this
Congress.
This bipartisan bill would reverse the 2017 law and allow Americans
to use the SALT deductions when paying federal taxes without a $10,000
cap, keeping money in the hands of American working families.
I applaud Congressman Suozzi for introducing this important
legislation. It will have a significant impact to help American
families, which is especially important after the devastating economic
effect of COVID-19 that has left so many middle-class Americans
struggling financially, including many Rhode Islanders.
The 2017 law was more than a mistake, it was bad policy, and I hope
that this body does the right thing by taking action to correct it.
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