The coalition of House Republicans who backed an increase to the state and local tax deduction cap in the House’s reconciliation bill may soon be back to square one as the Senate eyes changes to the policy.
Just two weeks ago, a group of Republican lawmakers from high-tax states such as New York and California celebrated after their weeks-long effort for a larger SALT cap culminated in a conference-wide agreement over a $40,000 amount that would increase over 10 years. The deal marked a temporary end to tense meetings with House Speaker Mike Johnson and fiscal hawks who opposed any spending increases.
But the SALT Caucus is gearing up to once again face another round of negotiations — this time, with their counterparts in the upper chamber, who have signaled this week that the SALT cap is on the table as the Senate rewrites portions of the reconciliation bill.
“There’s going to have to be some adjustment,” Senate Majority Leader John Thune told reporters Wednesday morning when asked about SALT. “Senators just are in very different places from where the House is at.”
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Rep. Nick LaLota, a SALT Caucus member, told NOTUS that he’s in the loop about these Senate-side conversations — but that he’s pleading with the Senate to not undo the four-month process behind the SALT deal.
That process is like “radioactive waste that’s been properly buried miles underground,” and to “unwind our deal is to unearth that radioactive material that would probably poison the rest of the bill,” LaLota told NOTUS.
Rep. Nicole Malliotakis, another SALT Caucus member, also said the coalition’s support of the bill is contingent on SALT.
“If you mess with SALT, you’re messing with the entire legislation, and you’re really impacting its ability to become law,” she told reporters.
SALT is much less salient of an issue in the Senate, where Republicans feel less political pressure to give tax relief for those in high-tax states. There’s no coalition of Republican senators from blue, high-tax states pushing for an increase, and the Democratic senators from the states at the center of the SALT debate have no political capital in negotiations.
“None of us care about it,” Sen. Kevin Cramer told NOTUS this week.
“To us, it’s the dumbest policy in the history of the world,” he said, but added that he doesn’t think any senators “are insensitive to Mike Johnson’s challenge, his math challenge.”
Others, like Sen. Ron Johnson, want to get rid of the deduction entirely.
“Eliminate it,” Johnson — who’s emerged as one of the strongest voices against the bill in the Senate — told reporters.
Sen. Rick Scott echoed several House conservatives’ arguments that allowing a higher deduction disproportionately hurts red states.
“It’s unfair to Florida,” he said. “I don’t know why we’re subsidizing state budgets at all.”
Sen. John Hoeven wasn’t nearly as strong, but told reporters this week that a reevaluation of SALT is among the conversations he’d like to have to figure out how to reduce spending in the bill.
“The House has a very large SALT number, so let’s probably take a look at that. There’ll be a lot of areas we can look at,” he said.
With most Senate-side mentions of SALT being negative ones, the House’s SALT supporters may have to wait for the tax bill to make its way back to the House to defend the deduction.
Still, the tax deduction has made its way into larger conversations about how to satisfy all the different camps of congressional Republicans, from those blasting cuts to Medicaid to those decrying an increase in the debt ceiling.
Those conversations have led the House SALT Caucus members to once again say they’ll tank the bill if it doesn’t include their desired SALT cap.
They’re also attempting to build support with arguments that the fact that there is a cap at all will offset other spending boosts in the bill that haven’t faced as much backlash, like a higher standard deduction.
Senators have not yet publicly discussed what a new SALT number could look like. The text of the Senate’s tax bill is set to be released next week.
Cramer mentioned the $30,000 cap — an offer that House GOP leadership previously made to SALT Caucus members, to no avail — as a potential option to appease moderate and conservative members.
“It’s still three times more than what it was before,” he told NOTUS.
But it’s unlikely that offer will satiate the SALT Caucus, who called the $30,000 amount “insulting” when it circulated among the House GOP.
“To disrupt the deal is to disrupt the rest of the bill,” LaLota said.
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Shifra Dayak is a NOTUS reporter and an Allbritton Journalism Institute fellow.
Ursula Perano, Helen Huiskes and John T. Seward contributed to this report.
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