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House Chair Leaves Door Open for Bumping Up State and Local Deduction in Tax Bill

House Ways and Means chairman Kevin Brady, R-Texas, speaks during a news conference announcing GOP tax legislation, Thursday, Nov. 2, 2017, on Capitol Hill in Washington.

House Ways and Means chairman Kevin Brady, R-Texas, speaks during a news conference announcing GOP tax legislation, Thursday, Nov. 2, 2017, on Capitol Hill in Washington. AP Photo/Jacquelyn Martin

 

Connecting state and local government leaders

But Ways and Means Committee Chairman Kevin Brady declined to speculate on the odds a property tax deduction cap would be raised above $10,000.

WASHINGTON — House Ways and Means Committee Chairman Kevin Brady on Friday did not reject outright the possibility a proposed cap on the federal deduction for state and local property taxes might be nudged upwards as work continues on Republican tax legislation.

But he didn't show enthusiasm for the idea either.

The Texas Republican was asked during an event held by Politico about whether a proposal is "on the table" to bump the cap on the deduction up to $12,500, from the $10,000 level now in the bill. "Bring the ideas," Brady shot back in response.

Route Fifty asked Brady after the event to clarify that response and whether he was open to raising the cap on the deduction.

His answer: “We’re open to a solution that drives us toward passage. So I don’t want to weigh the pros and cons of that.”

The state and local tax, or SALT, deduction has been a persistent sticking point as Republicans in the House move forward with their effort to rewrite of the U.S. tax code. Under current law, federal taxpayers can write off payments for state and local real estate property taxes, and on either state and local income or sales taxes.

The GOP tax bill would eliminate the deduction for income and sales taxes and would cap the property tax deduction at $10,000.

Republican lawmakers from higher-tax states, such as New York and New Jersey, have criticized the SALT-related proposals in the bill.

Among the GOP critics is U.S. Rep. Lee Zeldin, of New York, who has said eliminating the state and local deduction would be a "geographic redistribution of wealth, picking winners and losers."

He has also noted that New York is a net contributor to the federal coffers even with the deduction in place.

U.S. Rep. Tom MacArthur, a New Jersey Republican, has also been outspoken in defending the SALT deduction.

"Congressman MacArthur was able to reach a compromise that is a big win for New Jerseyans, who will still be able to deduct their property taxes," Frank Luna, his district chief of staff, said by email Friday.

Asked if MacArthur supports raising the state and local property tax deduction cap to $12,500, Luna replied: "He’d certainly be happy to see that change."

Brady argues that although the SALT deduction is scaled back, other aspects of his bill will favor taxpayers—even those in higher-tax states. “We are showing that families in high-tax states are getting tax cuts,” he said.

The Ways and Means chairman said he expects the committee to finish its markup of the bill by next Thursday.

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Bill Lucia is a Senior Reporter for Government Executive's Route Fifty and is based in Washington, D.C.

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