IL-06/IL-14: House Passes Temporary Repeal of SALT Deduction Cap

Lauren Underwood
Sean Casten

In Rare Show of Real Bipartisanship, Democrats Needed Republican Votes to Pass Temporary Repeal

The House of Representatives, in its 2nd-to-last vote before leaving for its Holiday recess, narrowly passed H.R. 5377, which included a 2-year repeal of the state and local taxes (SALT) with other components beyond SALT.

On final passage, the Yeas were 218 (with 5 Republican votes) and the Nays 206 (with 16 Democrats and the Independent) votes against.

The minimum number of votes needed to pass the bill was 216 votes (4 vacancies in the House), so those 5 Republican votes were needed for passage given the 16 leftist Democrats, including one member of the Squad, leader Alexandria Ocasio-Cortez, voted against final passage.

Given Republican votes were needed to pass the bill, the House Democrats strongly supported a Republican Motion to Recommit (MTR), which included:

  • Prevention of the SALT deduction cap repeal applying to taxpayers with annual income more than $100 million
  • Raise deductions for first responders expenses
  • Raise deductions for educators’ expenses

Normally Republican-sponsored MTRs fail, or pass by very close margins with a few Democrats crossing over to support the Republicans. This MTR vote count was different:

Source: California Target Book
Modified by McHenry County Blog

The MTR was approved by a 388-36 overwhelmingly bipartisan vote, but look at the two names highlighted in the Nays.

One won’t see this MTR vote in Casten’s or Underwood’s press releases, but voting with Squad member Ilhan Omar is something neither of the two Democrats representing portions of McHenry County want to brag about, not to mention being on a vote tally passed by 10x more than where they voted Nay.

Underwood said the following in a statement on passage of this bill:

“Before the Republican tax law took effect, taxpayers in our community were able to deduct all of their state and local taxes before calculating their federal tax bill—the average amount is over $14,000 and well over $20,000 for some in our community.

Now they’re limited to just $10,000—a loss of thousands for middle class families. This bill would help middle class Illinois families who were unfairly harmed by the Republican tax law by allowing them to once again deduct all of their state and local taxes,” 

Lauren Underwood press release 12/19/19

While Casten has not yet issued a press release, his thread of tweets is transcribed below:

“Today, I voted for H.R. 5377 the Restoring Tax Fairness for States & Localities Act to finally undo some of the damage done by the disastrous Republican tax bill to my constituents back in IL-06, as well as, working, middle class families, and teachers across the country.

“This bill lifts the SALT [deduction] cap, doubles the teacher tax credit & creates a deduction for first responders. From the very first tax, we have included a deduction for state & local taxes for the simple reason that we shouldn’t tax people twice on their hard-earned income.

“Alexander Hamilton wrote in Federalist 32 that the U.S. Constitution would give states ‘an independent and uncontrollable authority to raise their own revenues for the supply of their own wants.’

“What Hamilton understood is that certain services- roads, schools, fire departments, libraries- are better and more efficiently provided by local authorities. When we double tax that income, we create undue tension between federal and local authorities.

“That’s why I have fought all year for this moment to undo the GOP Tax Scam and restore the State and Local Tax Deduction for hard working people across this country.”

Sean Casten via Twitter 12/19/19

Given this bill threatens the Tax Cuts and Jobs Act of 2017, the Republican-controlled Senate will not take action on this legislation.

External links:


IL-06/IL-14: House Passes Temporary Repeal of SALT Deduction Cap — 5 Comments

  1. I live in Florida and we have reasonable real estate taxes.

    And no income tax or inheritance tax.

    Our pols are not greedy crooks like yours are.

    And we are tired of subsidizing your greedy school districts, townships, retirement funds, etc., because YOU cannot control them.

    Or remove them.

    If it were up to me you’d have ZERO deduction for SALT.

    It is about time you started paying your fair share to the federal government.

  2. To be clear, Underwood and Casten both voted for the repeal.

    I am curious to know what was in the entirety of the MTR, because I am quite sure that they were not casting votes against:

    •Prevention of the SALT deduction cap repeal applying to taxpayers with annual income more than $100 million
    •Raise deductions for first responders expenses
    •Raise deductions for educators’ expenses

    which is what this piece implies.

  3. M, after going into the Congressional Record for yesterday, here is the gyst I found and is cut & pasted below which you can read at your leisure.

    Congressman Rice of South Carolina who offered the MTR has been one of the most vocal opponents of raising SALT caps under the Underwood/Casten bill, as well as repealing it under 5 other bills in the House this year.

    So he applied the data/facts shared back in late June at a subcommittee of Ways & Means that only 6.4 % of taxpayers were negatively impacted by SALT deduction limits, based on empirical data from multiple research, most notably the Tax Foundation.

    The Tax Foundation also found the bulk of the taxpayers impacted were “the rich”.

    So Mr. Rice wanted to prevent the super-rich, and to nearly all people, $100,000,000 and over is “super-rich” in most people’s book.

    Now, to pay for this bill, the Democrats put in a tax increase “the top marginal income tax rate to 39.6% beginning in 2020, and reduces the dollar amount at which the increased tax rate begins.”

    So Rice’s MTR did was prevent the super rich who would pay the higher marginal tax rate in the legislation from getting a tax cut they can afford to do without.

    The only educated guess I have why Underwood and Casten voted against this MTR was their legislation, H.R. 1757, was already doing the same thing, but House Democratic leadership threw out their legislation they had been trying to pass for nearly 9 months, in favor of this bill. Appears their Nay votes on MTR were protests against leadership for throwing away the bill both of them, especially Underwood, tried to pass.

    As stated in the article, the MTR passed overwhelmingly, the savings applied gave firefighters and teachers an additional deduction limit outside of SALT, as outlined in the article.

    Ironically, two Democrats, Malinowski and Porter, spoke against the MTR, but both voted for it, anyway. Rice did vote against the final bill, which Underwood and Casten supported, but at least 3 Republicans were needed to pass the bill, and 5 supported it, which explains why the Democrats overwhelmingly voted for the MTR.

    Rice did not support the final bill. Again, to pay for it, it required raising taxes on the wealthy and busnesses.

    And because it involves a significant tax increase, this bill is DOA in the Senate.

    Again, the excerpt is below for your reading, and hope this helps:

    The Clerk read as follows:
    Mr. Rice of South Carolina moves to recommit the bill H.R. 5377 to the Committee on Ways and Means with instructions to report the same back to the House forthwith with the following amendment:
    In the matter proposed to be inserted by section 2(a), insert ‘‘if the adjusted gross income of the taxpayer for such taxable year does not exceed $100,000,000,’’ after ‘‘January 1, 2020,’’.

    In section 3, strike subsection (a) and insert the following:
    (a) IN GENERAL.—Section 164(b) of the Internal Revenue Code of 1986, as amended by section 2, is further amended by adding at the end the following new paragraph:
    ‘‘(A) IN GENERAL.—In the case of any taxable year beginning in 2020 or 2021, subparagraph (B) of paragraph (6) shall not apply.
    ‘‘(B) EXCEPTION FOR CERTAIN HIGH-INCOME TAXPAYERS.—Subparagraph (A) shall not apply to any taxpayer for any taxable year if the adjusted gross income of such taxpayer for such taxable year exceeds $100,000,000.’’.
    In the matter proposed to be inserted by each of sections 4(a), 4(b)(2), 5(a), and 5(c), strike ‘‘$500’’ and insert ‘‘$1,000’’.

    Further in the Congressional Record, here is what Mr. Rice (SC) said during discussion:

    Despite the terms of the underlying bill, it would retain the $10,000 cap on the SALT deduction only for tax returns where the people earn more than $100 million a year. This would produce about $7 billion in savings, and we would apply the $7 billion to doubling the deduction for firefighters and teachers’ supplies from $500, which is provided in the underlying bill, to $1,000.

    Madam Speaker, my friends across the aisle love to say that they are the party of the downtrodden and the middle class, but their actions certainly speak a lot louder than their words. The underlying bill here is a plain giveaway to the rich. Let me say that again: It is a plain giveaway to the rich.

    In excess of 50 percent of the benefit of restoring or taking away the SALT cap goes to the top 1 percent of wage
    earners. Madam Speaker, 94 percent—94 percent—of the benefit of doing away with the SALT cap goes to wage
    earners that are in the top 10 percent of American wage earners.

    Please, Madam Speaker, my friends across the aisle should stop saying that they are for the middle class.
    I represent an area in South Carolina. I live in Horry County, South Carolina. The average SALT deduction
    is $1,800. The SALT cap of $10,000 is five times higher than what is needed to cover the average SALT deduction in
    Horry County.

    But I represent poor counties as well. Marion County, South Carolina, 57 percent African American, has an average
    wage of $30,000 a year. If we do away with this SALT deduction cap, these people would be subsidizing, with their
    Federal income taxes, mansions in high-tax States.

    That is simply not fair, and it doesn’t just apply in South Carolina. It applies to rural areas all over our country, including rural areas in California and rural areas in New York.

    The Tax Cuts and Jobs Act signed into effect 2 years ago has restored opportunity in this land of opportunity.
    We have historic lows in unemployment. Record numbers of people are working in this country, in every demographic category. It cuts taxes for people at every income level.

    The opportunity has been restored in this land of opportunity, but my friends across the aisle dig at this.
    Their big opposition to this bill is that it was a tax cut for the wealthy. They say 80 percent went to the wealthiest 1 percent. That is not true. That only focuses on the time after the individual tax cuts expire.

    Their proposal to fix the Tax Cuts and Jobs Act, their proposal to fix this bill that they say is a tax cut for the
    wealthy, is to put back an even greater tax cut for the wealthy. Again, 94 percent of the benefit of this bill goes to people who earn in the top 10 percent of wage earners in this country.

    Madam Speaker, there is an old proverb: I can’t hear what you are saying because your actions scream so loudly
    Madam Speaker, if we truly are for the middle class, if we truly are for the downtrodden, if we want to support our
    firefighters and our teachers, vote for this motion to recommit.

    Keep the SALT deduction in place for the wealthiest of the wealthy, only those who are earning $100 million a
    year or more. Surely, they can afford to pay for their property taxes on their mansions without subsidies from rural
    people like the people in Marion, South Carolina.

    If we really believe that we want to back the middle class, let’s back up our words with actions.
    Madam Speaker, I yield back the balance of my time.

  4. This is a joke, a 2 year SALT reprieve?

    Read and weep, it’s going to hit this entire state of dysfunction.

    Real estate is gonna plunge

    Peoria, Illinois

    Median list price: $124,450

    2-year price change: -15.9%

    Percentage of underwater mortgages: 21%

    Foreclosures: 1 in every 932 homes

    Peoria claims the No. 1 spot among cities with real estate markets that are turning ugly for several reasons.

    This city in central Illinois has seen the biggest drop in home prices over the past two years of any city on this list.

    The average number of days houses are on the market and the percentage of homes for sale with price cuts are higher than the national averages.

    The percentage of underwater mortgages here is more than double the percentage nationwide.

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