President Joe Biden is continuing to push for a $2.25 trillion infrastructure bill, which supporters in the Democratic Party are describing as a bill that would put America back on the right track as the COVID-19 public health crisis comes to an end.
It might be members of his own party who ultimately doom the proposal in its current form, however, with a contingent of at least 17 House Democrats threatening to vote against it without a change in the language related to a particular tax.
“Critical to our state and our constituents”
The opposing lawmakers all hail from New York and demand a repeal of the State and Local Tax Deduction, otherwise known as the SALT tax cap, which was first implemented by the GOP in 2017.
Democrats who want to roll back the cap tend to represent states like New York where such taxes are disproportionately higher than elsewhere across the country.
SALT deductions primarily benefit wealthier residents of such high-tax states, according to Forbes, and those wealthy residents tend to have an outsized influence on elected representatives. The SALT deduction was capped at $10,000 after GOP-led tax cuts were passed in 2017.
In a letter to House leaders, the group of 17 Democrats wrote: “This issue is so critical to our state and our constituents that we reserve the right to oppose any tax legislation that does not include a full repeal of the SALT limitation.”
Simply repealing the SALT cap on its own could present a new obstacle to Biden’s plan to pass the infrastructure bill by further reducing federal tax revenue generated therein, thus making the bill more expensive than it already is. Its staggering price tag is a major point of contention for Republicans and even some moderate Democrats.
“We’re going to have some leverage here”
In the upper chamber, Sen. Joe Manchin (D-WV) has voiced his own issues with the current iteration of the infrastructure proposal.
He has vowed to withhold his support of the bill if Biden insists on hiking the corporate tax rate to 28% from its current 21% level.
Manchin said he is ready to use his political power in an evenly divided Senate to prevent a tax increase he believes would cause serious economic harm to U.S. corporations.
“If I don’t vote to get on it, then it’s not going anywhere, so we’re going to have some leverage here,” he said. “It’s more than just me. There’s six or seven other Democrats who feel very strongly about this. We have to be competitive, and we’re not going to throw caution to the wind.”
A mix of strong GOP opposition and threats from a handful of elected Democrats are causing Biden’s chances of sending a massive infrastructure bill through Congress to look slimmer by the day.