Lawler's last stand on SALT deduction reforms for married couples could come for vote

When Republicans passed Donald Trump’s tax cut plan in 2017, they needed to pay for it. What better way than by capping the deductibility of state and local taxes at $10,000, stinging taxpayers in reliably Democratic, high-tax states like New York and California?

Since then, attempts to scuttle the cap have failed miserably, as have schemes to funnel tax payments through nonprofits to maintain the deduction.

Now comes U.S. Rep. Mike Lawler’s latest bid to reform one unfair aspect of the cap, which limits both unmarried individual filers and married couples to $10,000 in state and local tax deductions.

Lawler's bill, which cleared the House Rules Committee last week, would double the cap for married couples to $20,000. It’s estimated to cost the U.S. Treasury $8 billion, with an estimated $2 billion going to California taxpayers and $650 million slated for New Yorkers, according to the Institute on Taxation and Economic Policy.

The bill stands as a test of Lawler's clout in Washington while he seeks a second term in the 17th District, which includes Rockland and Putnam counties, Westchester north of White Plains, and a sliver of southern Dutchess.

Lawler campaign spokesman Chris Russell declined comment on whether Lawler, R-Pearl River, who rails often about the federal deficit, has a plan to make up the $8-billion tax break he wants for families that earned up to $500,000 in 2023.

More: Lawler wants to double SALT deductions for married couples in latest bid for tax help

A study by the Institute on Taxation and Economic Policy found that 96% of the tax savings under Lawler’s bill would flow to the top 20% of American taxpayers, with household incomes of at least $144,000.

On Tuesday afternoon, Lawler announced on the social media platform, X, that his bill was up for a vote.

“My SALT Marriage Penalty Elimination Act will be coming to the floor for a vote to give much-needed tax relief to families at a time they're struggling to pay their bills,” he wrote.

When that vote will take place, however, remains to be seen, with the House Republican caucus in disarray. Lawler's post came hours before the GOP majority twice failed to move important legislation that Lawler supported. One bill that failed would have granted $17 billion in aid to Israel. A second vote failed to impeach Homeland Security Secretary Alejandro Mayorkas.

Can Lawler forge bipartisan coalition?

At issue is whether Lawler can forge a bipartisan coalition to pass the bill, once it reaches the floor for a vote. Many Republican legislators back the current cap on the deductibility of state and local taxes because it has little impact on their constituents.

Many of their constituents don’t have state and local tax bills that exceed $10,000. In addition, the 2017 legislation increased the standard deduction substantially, making it less beneficial for many filers to itemize their deductions.

Some Democrats oppose the bill as well, saying that it favors the wealthy.

More: Schumer bid to nullity IRS rules on SALT deductions fails in U.S. Senate vote

In recent Congressional testimony, Lawler called the SALT deduction “the single most important issue” to his constituents. He said other New York Republican members of Congress have echoed that sentiment.

Co-sponsoring his bill are fellow New York Reps. Andrew Garbino, R-Suffolk; Anthony Esposito, R-Nassau; Nick LaLota, R-Suffolk; and Marc Molinaro, R-Dutchess.

Another problem: The bill has yet to attract a sponsor in the U.S. Senate.

The SALT issue is expected to loom large in Lawler's upcoming Congressional campaign against former Rep. Mondaire Jones, D-Sleepy Hollow. Jones backed attempts to repeal the cap during his term in office from 2020 to 2022. But those measures failed to gain traction.

Jones lays the blame for the SALT cap on Republicans who enacted the cap — before Lawler took office.

“Republicans like Congressman Lawler created this crisis when they passed the Trump tax scam bill in 2017 that capped the SALT deduction at $10,000 and forced households in the lower Hudson Valley to pay thousands more dollars in annual taxes,” Jones said. “Now Rep. Lawler wants credit for trying to make minor improvements to a problem his party and the president he supported caused.”

However, Russell, Lawler's campaign spokesman, blames Jones and House Democrats for not repealing the cap.

“In 2021 and 2022, Mondaire Jones and his party controlled the White House, Senate, and House, and despite all his talk, they failed to repeal the SALT cap,” Russell said. “Congressman Lawler, on the other hand, has stood up to members of his own party and is working with like-minded Democrats and Republicans to deliver much needed tax relief for middle-class families.”

The SALT cap will expire following the 2025 tax year, though what happens with the cap is expected to become part of any tax legislation in 2024. There was talk that it might become part of the pending 2023 tax bill, which extends corporate tax breaks and expands child tax-credit program, but it was not included in the bill.

What should married couples do?

Lawler’s bill only covers the 2023 tax year, leaving married couples in a quandary. The bill remains pending in the U.S. House as families are hunkering down to gather their financial documents in time for the April 15 tax deadline.

Should they file now under the current law, and then file an amended return if SALT relief is passed? Or should they wait to see if the dust clears in Washington on SALT?

Robert Winton, a certified public accountant at Citrin Cooperman in White Plains, said those couples who think that doubling the deduction cap to $20,000 would provide financial benefits may want to delay their filing instead of having to file an amended form, which can prove onerous.

“It makes sense to wait,” said Winton. “Retroactive is a nightmare.”

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David McKay Wilson writes about tax issues and government accountability. Follow him on Twitter @davidmckay415 or email him at dwilson3@lohud.com.

This article originally appeared on Rockland/Westchester Journal News: Rep. Lawler's SALT deduction reform bill eyes help for married couples