As Taxes Come Due, Hudson Valley Dems Gird For SALT Cap Battle

HUDSON VALLEY, NY — Hudson Valley lawmakers are in near universal agreement that a repeal of limits on federal income tax deductions for state and local taxes (SALT) is needed. The elected officials in the region have sharp disagreements about how to reach that goal.

Democrats in Albany, Washington and the Hudson Valley have so far presented a united front when it comes to repealing the Trump-era tax reform rules capping federal income tax deductions at $10,000 for state and local taxes already paid. There is a wide gulf in the sense of urgency the elected officials believe the repeal efforts deserve.

SEE ALSO: Suozzi Vows 'No SALT, No Deal' As Tax Code Is Mulled

In the Hudson Valley, where property taxes alone on even a modest home can exceed the current $10,000 limit on SALT, lawmakers see repealing the cap as a pressing concern for constituents. Democrats widely see the SALT cap as a thinly veiled penalty aimed at left-leaning states with higher tax burdens on residents.

"The SALT deduction cap passed during the Trump administration has caused financial distress for so many of my constituents," Congressman Jamaal Bowman said at an event in White Plains intended to illustrate how the cap affects ordinary Westchester families. “We are dealing with the worst pandemic in 100 years, which has devastated our communities, and must do everything we can to put money back into the hands of New Yorkers and make people whole. I’m proud to co-sponsor this legislation which would do just that by eliminating the cap on SALT deductions."

SEE ALSO: Lawmakers Seek Repeal Of 'Body Blow' SALT Tax Cap

Repealing the SALT deduction cap is somewhat less of a priority for Democrats from districts with lower tax burdens. Although President Joseph Biden has signaled his support for a repeal of the SALT cap, he has so far not shown any indication the administration will make the repeal a legislative priority. Democratic governors, including New York’s Andrew Cuomo, took the unusual step last week of issuing an open letter to a U.S. President of their own political party. The letter calling on Biden to throw his support behind a SALT cap repeal, was signed by six other governors, including New Jersey Governor Phil Murphy, California Governor Gavin Newsom, Connecticut Governor Ned Lamont, Hawaii Governor David Ige and Illinois Governor J.B. Pritzker.

“Like so many of President Trump's efforts, capping SALT deductions was based on politics, not logic or good government,” the state executives wrote in the letter dated April 2. “This assault disproportionately targeted Democratic-run states, increasing taxes on hardworking families. This was unacceptable then and is simply untenable given the dire economic conditions caused by the pandemic.”

SEE ALSO: Bill To Eliminate SALT Deduction Cap Introduced In Congress

U.S. Rep. Thomas Suozzi has taken his position a step further. Last month, Suozzi joined six other democrats in pledging to oppose any proposed tax code changes without the repeal of the cap on the State and Local Tax deduction. Thus far, other Hudson Valley lawmakers have declined to make pledges to hold up legislation until the SALT cap is repealed.

“We are in a battle to save New York! Every day the SALT cap remains in place, New Yorkers hurt. The SALT cap is crushing New York and many other high-cost progressive states,” Suozzi, who also spoke at the White Plains event, said. “Higher income residents are fleeing our state for lower-taxed states that don’t provide the same level of services. As New York loses population, we also lose influence in the Congress even though we are the largest net donor to the federal government. My top priority in Congress remains to repeal this unfair cap on our state and local tax deduction.”

Congressman Mondaire Jones, who represents parts of Westchester County as well as Rockland County, is a co-sponsor of Suozzi’s bill to repeal the cap on the deductions. Rather than insisting on a “no SALT, no deal” position like his congressional colleague, Jones has expressed optimism that a deal on SALT cap repeal can be reached without using other tax reform proposals as leverage.

“Since the previous president capped the SALT deduction at $10,000 in 2017, hundreds of thousands of people in my district, where we pay the highest property taxes in the entire nation, have been forced to pay thousands of dollars more in taxes each year — a crushing burden for middle-class families and a key contributor to the affordability crisis here in our district,” Jones told Westchester County Executive George Latimer and other gathered Hudson Valley leaders last month. “That is why Congressman Suozzi and I, with Congressman Bowman as a cosponsor, introduced the SALT Deductibility Act. Our bill would fully restore the SALT deduction and put thousands of dollars back into the pockets of hundreds of thousands of working people here in Westchester — money that can be spent on housing, food, transportation, child care, health care, and so much more.”