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Top Senate tax writer says GOP will not tweak state and local deduction limits

Key Points
  • Senate Finance Committee Chairman Chuck Grassley's office says he will not revise the new caps on state and local tax deductions.
  • President Donald Trump had said he is open to revising the limits on the deductions passed as part of the GOP tax law.
Chairman Sen. Chuck Grassley, R-Iowa, takes his seat for the Senate Finance Committee organizational meeting and hearing on pending nomiations on Tuesday, Feb. 2, 2019.
Bill Clark | CQ-Roll Call Group | Getty Images

Americans hoping to get full state and local tax deductibility back will have to wait.

Senate Finance Committee Chairman Chuck Grassley will not tweak the new state and local tax deduction cap while he leads the panel, a spokesman for the Iowa Republican said Thursday. U.S. residents are filing taxes for the first time this year under the new GOP-written tax code, which limited the deduction for those taxes to $10,000.

"The Senate Finance Committee won't be revisiting the SALT deduction reforms made in the Tax Cuts and Jobs Act under Chairman Grassley's leadership," Grassley spokesman Michael Zona said.

The statement comes a day after President Donald Trump said he would be "open to talking about" revising the deduction limit. Democrats slammed the policy change passed in December 2017 — and 11 Republicans from the high-tax states of New York, California and New Jersey voted against it. Multiple freshman House Democrats who unseated GOP lawmakers in those states in November ran in part on repealing the deduction limits.

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Speaking to regional reporters Wednesday, Trump said "some people from New York have been speaking to me about doing something about that, about changing" the cap. He did not say what potential tweaks he would consider.

Democrats have slammed the GOP tax plan — which slashed the corporate rate from 35 percent to 21 percent and trimmed taxes for most individuals — as a boon to companies and the wealthy. The party mulled various attacks on the tax law when it took the House majority last month, including criticism related to the state and local deduction limits.

Democrats argue that the policy hurts middle-class families and disproportionately affects blue states. The changes do hit some middle-class Americans: about 30 percent of taxpayers use the deduction, according to The New York Times.

However, people making more than $100,000 claimed about three-quarters of the $550 billion in state and local taxes deducted in 2015, the Times reported, citing the Government Finance Officers Association.

On Thursday, Zona said, "It's ironic that the same Democrats who criticized the Tax Cuts and Jobs Act for supposedly benefiting only the wealthy are now advocating for a change to the law that would primarily benefit the wealthy." He instead argued that states should lower their taxes.

Republicans hold a 53-47 majority in the Senate. Grassley can serve as Finance Committee chairman until 2021, when term limits will kick in.

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