Extra Tax Break For Rich People A Major Holdup For GOP's 'Big, Beautiful Bill'

WASHINGTON — House Republicans are fighting over how much their “big, beautiful bill” should cut rich people’s taxes — and it’s gotten ugly. 

After a long meeting on Thursday morning with members from the various factions of the Republican conference, who have different gripes about the various parts of the legislation, House Speaker Mike Johnson (R-La.) identified the federal deduction for state and local taxes, or SALT, as a major hangup.  

“Everyone has known that the SALT issue is one of the big ones that we have to resolve,” Johnson told reporters. “It’s one of the key pieces of this equation to sort of meet the equilibrium point that everybody can be satisfied with.”

A bigger SALT deduction would benefit higher-income taxpayers who would already score a permanent extension of lower income tax rates from the big beautiful bill, as Republicans refer to it, which also bestows a $30 million exemption from the estate tax for America’s wealthiest heirs and heiresses. The legislation would offset part of the cost of the tax cuts by cutting $1 trillion from programs that help poor people afford food and medical care. 

The SALT issue has festered for years among both Republicans and Democrats from high-tax states like New York and California. Back in 2017, Republicans put a $10,000 cap on the federal deduction for what households pay in tax to their state and local governments. 

Blue state Republicans demanded a higher cap, so the initial draft of the bill would raise the limit to $30,000, with lower limits for households with incomes above $400,000 — but that’s still not enough for Reps. Elise Stefanik (R-N.Y.), Mike Lawler (R-N.Y.), Nick LaLota (R-N.Y.) and Andrew Garbarino (R-N.Y.). The four of them could sink the bill all by themselves. 

“What we have said from the very beginning is we are willing to negotiate in good faith, but it has to be in good faith, and not trying to jam us with a number as they introduce the bill for markup,” Lawler said Wednesday on CNN, adding that the $30,000 cap was “not acceptable” and he would vote no on the bill. 

Lawler’s stance prompted a frustrated response from Rep. Marjorie Taylor Greene (R-Ga.).

“With the median income of $118,882 in Lawler’s district the SALT cap of $30,000 should be an easy YES for Mike Lawler,” Greene wrote. “The rest of America doesn’t want to and shouldn’t have to make up the difference!!!!!”

Lawler responded quickly: “Shockingly the ‘Jewish Space Laser’ lady once again doesn’t have a clue what she is talking about.” He went on to note that Republicans wouldn’t have a majority in the House if it weren’t for moderates such as himself holding seats in Democratic states, to which Greene suggested he was insufficiently loyal to President Donald Trump. 

But Greene has a point about SALT: Lifting the cap mostly benefits high-income taxpayers. One proposal from the SALT diehards would raise the limit to $62,000 for individuals and $124,000 for joint filers. According to the Committee for a Responsible Federal Budget, such an increase would cost more than $900 billion over a decade — more than “no tax on tips” and Trump’s other campaign ideas combined — and 60% of the benefit would accrue to households earning more than half a million dollars per year. 

Another proposal would lift the SALT cap for individual filers to $40,000, which the National Taxpayers Union Foundation estimated would cost $356 billion, about the price of 13 aircraft carriers, or a fancy steak dinner in a D.C. restaurant for everyone in America, or a million new homes. 

The SALT demands are just one of the problems for the big beautiful bill. The other major obstacle as of Thursday is that the various spending cuts don’t go deep enough for conservative lawmakers such as Rep. Chip Roy (R-Texas), who has indicated he would vote no. 

“It will almost assuredly increase deficits,” Roy told HuffPost, referring to the imbalance between spending and tax cuts. Adding more SALT cuts would increase deficits even more. 

Speaker Johnson has managed to paper over the disagreements among Republicans by telling them to support the bill on procedural votes while the details get sorted out. With a self-imposed deadline to pass the bill next week, the speaker is running out of time to finish negotiations. 

But Johnson has maintained his optimism, saying he would continue negotiating on SALT through the weekend, and that if they have to make more room for the tax cuts, they would be able to deepen the cuts elsewhere, including potentially to Medicaid and the Supplemental Nutrition Assistance Program, even though doing so could alienate the moderate lawmakers who don’t care about SALT.  

“I am convinced that we’ll be able to adjust the dial, so to speak, so we can come to an agreement that will meet the criteria that everybody has and that we can move this thing forward,” Johnson said.