TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Sunday, September 9, 2018

Will Republicans Press On With Tax Cuts 2.0 Despite SALT Indigestion?

Bloomberg, Republicans Consider Dropping Second Phase of Tax Cuts After SALT Backlash:

House Republicans had planned to use a second phase of tax cuts to force Democrats into a difficult vote ahead of mid-term elections. Now, party leaders may drop the effort, fearing it could backfire by antagonizing voters in some hotly contested Congressional districts.

The proposal would make the individual changes in last year’s overhaul permanent -- including the $10,000 annual cap for state and local tax deductions, one of the law’s most disputed provisions. That would put Republican lawmakers in high-tax states like New York, New Jersey and California in the tricky position of either supporting the cap, or voting against tax cuts backed by their party.

Largely because of the SALT cap dilemma, House Republicans are hitting the pause button on “Tax Reform 2.0” legislation, according to three GOP aides who requested anonymity to speak about the matter. The lawmakers want to weigh the political benefits and risks of a vote on the bill in the coming weeks, and assess if they have enough support to pass it.

Bloomberg, Ryan Says Vote on New Tax Cuts Still Planned, Despite SALT Hangups:

House GOP leaders are forging ahead with a vote on a second phase of tax cuts this month, despite dissension from Republicans in high-tax states who say the measure would hurt their voters.

The legislation would make permanent all the individual changes in the 2017 tax law, including the $10,000 cap on state and local tax deductions. The decision to hold the vote shows leaders have decided they can sacrifice the support of some Republican lawmakers in New York, New Jersey and other high-tax states -- and don’t mind putting them in the tricky spot of either supporting the cap, or voting against tax cuts backed by their party.

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