Dems focus on tax priorities ahead of election

Tax Hot Topics newsletter House Democrats voted to partially suspend the limit on the state and local tax (SALT) deduction on Dec. 19, a move that largely serves to offer a preview of future tax legislation should Democrats regain control of the White House and Senate following the 2020 election.

The Restoring Tax Fairness for States and Localities Act (H.R.5377) would lift the $10,000 SALT deduction cap for 2020 and 2021 for most taxpayers, restore the 39.6% top individual tax rate and retroactively double the cap for married couples filing jointly in 2019.

Repealing the cap has been a top priority for Democrats, many of whom represent states with high taxes, since it was enacted by the Tax Cuts and Jobs Act. Republicans have largely written off the proposal as a handout to wealthy taxpayers and are especially opposed to increasing tax rates to offset the lost revenue. House Republicans voted almost unanimously against the bill despite Democrats adopting a last-minute Republican amendment to keep the cap in place for taxpayers with an adjusted gross income exceeding $100 million.

The bill alone is not expected to be considered by the Senate and President Donald Trump has vowed to veto it if it reaches his desk, but Democrats will likely continue to seek some relief from the SALT deduction cap.

Dustin Stamper
Managing Director
Washington National Tax Office
T +1 202 861 4144

Omair Taher
Senior Associate
Washington National Tax Office
T +1 202 861 4143

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