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Democrats May Include Tax Cut That Benefits Wealthy Americans In Biden’s Huge Spending Plan

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A group of Democrats seek to repeal the Trump-era limit to state and local tax deductions, adding that it is a part of President Biden’s signature spending plan. It sets up a battle with progressive Democrats who claim that doing so would result in a massive tax cut for those at the top.

The so-called SALT deductibility cap, which will expire in 2026, restricts the amount of local and state taxes Americans can subtract from their federal taxes. Although centrist Democrats have been pushing for a complete repeal of the SALT deduction cap in the President’s $1.75 Trillion “Build Back Better” plan, they have come up against opposition from left-leaning lawmakers.

It was reported that lawmakers are looking at removing the $10,000 cap until 2025, and offset the cost by imposing the deduction limits in the following years. Reps. Tom Suozzi and Josh Gottheimer said that the SALT deduction cap remains a severe blow to their home state of New York, New Jersey. They said that they will continue working with Senate and House leadership to repeal the cap on the SALT deduction. They said “No SALT, no deal.” 

However, Democrats would have to vote for a policy to off-balance the benefits of wealthy citizens who live in blue-colored coastal states if the deduction limit was removed.


According to a Tax Policy Center analysis, a large portion of the benefits would go to households earning more than seven figures per year. The top 0.1% of households in America would get an average tax cut amounting to $145,000. 57% of the benefits would be available to the top 1%.

Senator Bernie Sanders denounced reports that a SALT repeal would be included in the family spending plan, adding that it would be unacceptable.

Sanders emphasizes how giving more tax breaks to the very wealthy is a bad idea in a time of income and wealth inequality. He states that the radical left campaigned for the wealthy to pay their fair share and not more tax breaks. He said he is open to compromises to protect the middle class, adding that he won’t support tax breaks for billionaires.

Sanders would have to win the 50-50 Senate majority in voting for a package to include a SALT repeal. Richard Neal, Chairman of the House Ways and Means Committee, said that there are ongoing discussions about the deduction cap, adding that Biden didn’t include a SALT repeal within the framework he presented last week. The White House previously stated that they were open to eliminating the deduction limit.

White House press secretary Jen Psaki stated that it is not revenue-raising and that there will be discussions about how it would be paid for the amount that would be taken out. She said there is a discussion about what is most important in achieving the administration’s goals.

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