SALT Deductibility Act

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.

And are people talking about leaving the region because of the effect of the taxes? I yield to the gentlewoman.

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.

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.

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.

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.

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?

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.

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).

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.

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.

I thank the gentleman for being such a fierce advocate.

Madam Speaker, I want to travel across the country from California now

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).

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?

So you are getting taxed on the taxes you have already paid.

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.

But they are being taxed the same at the Federal level.

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).

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).

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?

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.

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.

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.

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

is in keeping with progressive policy, because it supports those States that want to promote progressive policies within their States.

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.

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.

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.

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.

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.

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.

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.

Madam Speaker, I thank Congressman Suozzi for putting together this Special Order hour.

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.

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.

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.

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.

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?

Yes, I did.

That is right. It is a fact of life, yes.

And they could build the hospitals and the schools and

the roads. Where were they going to get the money if the Federal Government took all of the money to fight the war?

Yes. And many of the first responders came out and supported this bill last week.

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

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.

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.

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.