- Sanders indicated on Wednesday that a big tax handout to the rich was getting dropped.
- But other Democrats pushed back and said "not so fast."
- At least three House Democrats are threatening to oppose Build Back Better if SALT is scrapped.
Sen. Bernie Sanders of Vermont said Wednesday that a big tax break for the wealthy was out of Democrats' Build Back Better plan, and almost immediately triggered a wave of resistance from moderates who argued the issue was far from settled.
The issue at hand is the $10,000 limit on the amount of state and local taxes that people can deduct from their annual bills, known as SALT. Some Democrats from New York, California, and New Jersey are strong advocates of rolling it back or eliminating it entirely, handing a big tax break to high-income earners in high-tax states and cities. Taxpayers used to have unlimited SALT deductions before the new limit was introduced in the 2017 Trump tax law.
But the provision caused angst among many Democrats over the fall. Many economists say the measure carries outsized benefits for the wealthy over the poor and middle-class. Including it could also crowd out spending for other programs like an extension of the expanded child tax credit or childcare subsidies.
The Vermont progressive indicated the tax break was getting dropped following a report published in The Hill on Wednesday morning. The report cited anonymous Democratic senators who said SALT was likely out of the package due to objections from Sen. Joe Manchin of West Virginia, a pivotal vote in the 50-50 Senate.
"I'm glad to hear that the SALT provisions are no longer in play for Build Back Better," Sanders wrote on Twitter. "Democrats need to focus on the struggling working class, not giving more tax breaks to the wealthy."
—Bernie Sanders (@SenSanders) January 26, 2022
But other Democrats immediately pushed back and said that tax fight was not over.
Last week, Reps. Josh Gottheimer of New Jersey, Tom Suozzi of New York, and Mikie Sherill of New Jersey issued a statement threatening to oppose the sprawling health, climate, and safety-net spending bill if it didn't include the tax cut. Both Gottheimer and Suozzi's offices directed Insider to the same statement Wednesday when reached for comment.
"SALT remains a top priority," the trio wrote. "We support the President's agenda, and if there are any efforts that include a change in the tax code, then a SALT fix must be part of it. No SALT, no deal."
Sherrill previously told Insider that she would oppose the bill if SALT wasn't addressed. Democrats cannot afford more than three defections in the House given their razor-thin control of the lower chamber.
Sanders may encounter resistance in the Senate as well. "The truth of the matter is we're still waiting details on how we are moving forward on BBB and no framework or legislative text has been drafted to assure SALT — or other pieces — have been left out," a Senate Democratic aide familiar with the talks said.
Sen. Bob Menendez of New Jersey tried teaming up with Sanders last month to negotiate a compromise but the pair haven't struck a deal so far.
Menendez has been strongly in favor of lifting the SALT cap and still wants to address it in any bill."This is news to me," he said in a statement to Insider. "As we come together to figure out next steps on the BBB package, I'm focused on finding ways to build support for our agenda and unite Democrats, not divide us. If something is clear, is that SALT remains high in my list of priorities."