A small cohort of House Republicans from New York, California, and New Jersey will fly to Mar-a-Lago this weekend to speak privately with President-elect Donald Trump about how to craft new legislation involving the state and local tax (SALT) deduction, a controversial tax write-off that is set to expire at the end of 2025. Trump pledged on the campaign trail that he would "get SALT back" if elected to a second term — which suggests he’s open to significantly increasing the deduction limit or scrapping the cap altogether.
The meeting is scheduled to take place on Saturday afternoon inside the president-elect's Florida resort, sources familiar with the planning tell National Review. During that closed-door huddle, blue-state House Republicans will pressure the president-elect to call for a massive expansion of the SALT deduction limit or a wholesale elimination of the cap in this year's tax bill. The current federal tax code provision — which was included as a pay-for in Trump's 2017 Tax Cuts and Jobs Act — allows individuals and families to deduct only $10,000 of their state and local taxes from their federal income taxes.
"We’ll discuss SALT, and we’ll discuss how we can use a tax code to bring domestic manufacturing, pharmaceuticals and medical supplies back home, and how we can stop congestion pricing for New York City — something President Trump also really dislikes," Representative Nicole Malliotakis (R., N.Y.), a member of the tax-writing House Ways and Means Committee, told National Review on Thursday. She reiterated the oft-repeated blue-state Republican position that an expansion of SALT is a necessary reaction to high-tax policies passed by her home state's Democratic governor and mayor.
GOP leaders are hoping to pass tax-related legislation through the budget reconciliation process, which allows lawmakers to circumvent the Senate's 60-vote threshold for passing legislation. Congressional Republican leaders are still debating whether to lump a tax-related package in a reconciliation bill on defense immigration, and energy, or punt the tax package until later in the year and try and pass it as a standalone bill.
The SALT deduction is broadly unpopular among fiscal conservatives in Congress, who argue that the expensive tax write-off subsidizes high tax-and-spending schemes in progressive states.
But the provision is beloved by House Republicans who represent competitive districts in tax-heavy Democratic states like New York and California. And given this year's slim House GOP majority, some expansion of SALT is seen by many congressional Republican leaders as a must-include sweetener for blue-state House Republicans in exchange for their votes on tax-related reconciliation package this year.
"I've been very clear, I will not support a tax bill that does not lift the cap on SALT," Representative Mike Lawler (R., N.Y.) said last year. "My vote, along with many of my colleagues from New York, New Jersey, California, are going to be critical to pass a tax bill," he said, adding: "If nothing passes, the cap on SALT completely expires."
It’s likely that Lawler will present Trump and his team with his own legislative proposal — called the SALT Fairness and Marriage Penalty Elimination Act — which would raise the SALT deduction cap from $10,000 to $100,000 for individuals and would allow married couples filing jointly to deduct up to $200,000.
Trump and congressional GOP leaders have a tough balancing act here. Some blue-state lawmakers — including Representative Nick LaLota (R., N.Y.) — have already said that even doubling the SALT cap t0 $20,000 isn't enough to win their vote on a broader tax bill.
"We are very pleased that the president — during the course of his campaign — made a promise to fix SALT," LaLota told National Review on Thursday, declining to go into detail about what he plans to tell the president-elect during Saturday's meeting. "It's time to hammer out the details so that we can all have a big, beautiful reconciliation."
And yet something like Lawler's proposal — which would amount to a tenfold deduction increase for individual filers — is seen as a nonstarter among deficit hardliners whose votes will also be crucial to extending the 2017 tax cuts.
The goal is to find a middle ground that can win over the likes of fiscal hawks like Representative Chip Roy (R., Texas), who are concerned about the tax revenue impacts that would result from significantly increasing the deduction limit or scrapping the cap altogether. "I think we need overall deficit reduction. That's my priority, so we've got to balance them," the Texas Republican told reporters on Thursday.
Saturday's SALT-focused meeting with blue-state House Republicans is one of many closed-door meetings on the president-elect's schedule over the next few days. Trump also hosted dinner in Mar-a-Lago with Republican governors Thursday evening to chat about how GOP chief executives can help enact his agenda this year and beyond.
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