SALT cap gets pulled into speaker fight

Rep. Jim Jordan, R-Ohio, has endorsed a plan to increase the state and local tax deductions to $20,000 for individuals and $40,000 for couples in a bid to win over more Republicans, especially from blue states, in an indication that the issue could play a serious role in the negotiations over who will ascend to the top position in the House.

The SALT deduction was capped at $10,000 as part of the 2017 Tax Cuts and Jobs Act, and it has remained controversial for many lawmakers who argue the law is unfair for residents of high tax states that are often blue. Municipal issuers often say the cap infringes on their own sovereign ability to levy future taxes and largely oppose it.

But that still may not be enough to win Jordan the gavel, as infighting grips the Republican party. In votes on the House floor, 20 Republican lawmakers voted against Jordan and on Wednesday, it rose to 22. He suspended a third vote on Thursday, and expressed support to temporarily empower Speaker Pro Tempore Patrick McHenry, R-N.C., though it remains unclear if Jordan himself will continue to campaign actively to become speaker.

Jordan may not be able to win over all of the holdouts within his own party, but his endorsement of raising the cap may be more targeted. Reps. Anthony D’Esposito, Andrew Garbarino, Nick LaLota and Mike Lawler, all Republicans from New York who all voted against Jordan, have made it known that the SALT cap is a high priority for them and all of them have their own individual proposals. Rep. George Santos, R-N.Y., also introduced his own dog in the fight.

But the current proposal is peanuts compared to what the New York Republicans have proposed. LaLota introduced the SALT Fairness and Deficit Reduction in May, which would raise the SALT deduction cap to $60,000 for single filers and $120,000 for couples. Lawler’s proposal would raise it to $100,000 for individuals and $200,000 for couples.

“I want the next speaker to have an appreciation for blue-state Republicans from the suburbs and our constituents who have difficulty affording life in our blue states that spend a lot of money,” LaLota said. “I want the next speaker to have a specific appreciation for that.”

But the effort to corral votes may still have to face down other Republicans, who largely oppose it. Rep. Mike Garcia, R-Calif., came up with the idea to double the current SALT cap and to bring it into Jordan’s speaker bid, but he plans to add it to the House GOP tax package, and the House Ways and Means Committee took out the possibility of a SALT cap increase in June. A vote on the measure still has yet to take place.

The SALT cap could be a stepping stone for Jordan as he works to build up a more base of support within his own party.

That’s already gathering some ire from hard right Republicans, who claim that the move gives Democrats an advantage, as McHenry negotiated a deal with the White House earlier this year to raise the debt limit and that was largely rejected by hard right members of his party. Others welcomed the chance to breathe.

“It’s smart to take a pause and regroup to ensure that members like myself have their concerns assuaged,” LaLota said.

Even if Jordan were to abandon the bid to become speaker, its clear the SALT cap is an issue that future candidates would have to be mindful of.