Nancy Pelosi Proposes Moratorium on SALT Deduction Cap; Benefits Rich in Blue States

Nancy Pelosi (Chip Somodevilla / Getty)
Chip Somodevilla / Getty

Speaker of the House Nancy Pelosi (D-CA) is proposing a two-year moratorium on a tax deduction enjoyed primarily by rich people in Democrat-run states — a deduction that President Donald Trump limited strictly in his 2017 tax reform law.

The proposal is part of Pelosi’s $3 trillion, 1,815-page bill for a fourth phase of coronavirus relief, called the “Health and Economic Recovery Omnibus Emergency Solutions Act,” or the ‘‘HEROES Act.’’ The bill includes many other left-wing projects and priorities, from “ballot harvesting” to a $10 million boost to the National Endowment for the Arts.

The deduction, known as the State and Local Tax (SALT) deduction, allows taxpayers to deduct state and local taxes from their federal income tax bill. Historically, that has meant the wealthiest people in the states with the highest income, sales, and property tax rates — which tend to be governed by Democrats — have enjoyed the largest benefit from the deduction.

But in 2017, President Trump and the Republicans capped the SALT deduction at $10,000. That raised taxes on wealthy people in “blue” states. (Contrary to what Democrats, including former Vice President Joe Biden, have claimed, President Trump’s tax reform actually lowered taxes for the middle class, while many wealthy people actually saw their taxes rise.)

Democrats dislike the SALT deduction cap because it prevents “blue” states from passing on the burden of their high-tax policies to the federal taxpayers in general, and creates political pressure on profligate state governments to spend less.

On page 224 of Pelosi’s bill, she proposes suspending the SALT deduction cap for two years, in 2020 and 2021.

SALT deduction moratorium (Screenshot / House.gov)

SALT deduction cap moratorium (Screenshot / House.gov)

The moratorium would provide a massive windfall for millionaires and billionaires, whom Pelosi often claims to oppose:

That is not the only provision in Pelosi’s bill that favors the rich and powerful. Another section, referred to by critics (left and right) as the “corporate lobbyist bailout,” would provide Paycheck Protection Program (PPP) loans to political groups

Joel B. Pollak is Senior Editor-at-Large at Breitbart News and the host of Breitbart News Sunday on Sirius XM Patriot on Sunday evenings from 7 p.m. to 10 p.m. ET (4 p.m. to 7 p.m. PT). His new book, RED NOVEMBER, is available for pre-order. He is a winner of the 2018 Robert Novak Journalism Alumni Fellowship. Follow him on Twitter at @joelpollak.

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