Senate Budget Committee Chairman Bernard Sanders on Tuesday dashed hopes of Congressional Democrats that generous federal income tax relief that primarily benefits blue states would be included in the budget bill. $ 1.75 trillion from President Biden.

Mr Sanders, a Democratic socialist from Vermont, said any reinstatement of the state and local tax or SALT deduction must be tailored only to the middle class.

“Democratic negotiators are working on repealing the SALT deduction cap for up to five years, which would cost $ 475 billion and give the richest 5% $ 400 billion in tax cuts,” he said. he declares. “As a result, the richest 1% would pay less tax after [the] adopting the Build Back Better plan than they did after Trump’s tax cut in 2017. This is more than unacceptable.

The comment came after moderate Democrats, especially those in high-tax states in the northeast and west, initiated a five-year repeal of the deduction cap for SALT. The deduction allows individuals to write off certain state and local taxes against their federal income tax.

The fight against SALT further complicates efforts to ensure passage of Mr Biden’s spending plan by a tightly divided Congress.

Former President Trump’s sweeping tax cuts in 2017 capped the deduction at $ 10,000 per year. It also changed the eligibility criteria, allowing filers to deduct property taxes and state income or sales taxes, but not both.

Since then, moderate Democrats have sought to restore the tax credit. Some have even threatened to oppose Mr Biden’s welfare bill unless he reinstates SALT.

“We will continue to work with House and Senate leaders to ensure that the SALT deduction cap is repealed,” said Rep. Josh Gottheimer, a Democrat from New Jersey. “No SALT, no okay.”

Mr. Sanders, however, strongly opposes the change. Instead of a complete repeal of SALT, Sanders said he would only support minor tax credit changes that only benefit those who earn less than $ 400,000 a year.

“The truth is, in high tax states like New York and California housing is extremely expensive… I think we should take care of it,” he said. “Insofar as it impacts the middle class [and] part of the upper middle class. But what we shouldn’t do is exempt, is repeal SALT for mansion owners and billionaires. “

Mr Sanders further promised that if moderate House Democrats pass the welfare bill with an overly generous SALT component, the Senate will remove it from the final package.

“In a time of massive income and wealth inequality, the last thing we should do is give more tax breaks to the very rich,” he said.

“Democrats campaigned and won on a program that demands that the very rich finally pay their fair share, not a program that gives them more tax breaks.”

Since Democrats plan to push the package through party line votes using budget reconciliation, a process that allows spending measures to pass the Senate to 50-50 by simple majority, the White House cannot afford to lose Mr. Sanders’ vote.

Sir. Biden also can’t afford to lose his party’s support in the House, where Democrats only have a three-seat majority, given widespread opposition from the GOP. As of now, nearly two dozen House Democrats have pledged to oppose the reconciliation plan unless SALT is included.

“No SALT, no dice,” Mr. Gottheimer said.

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