Leaders of the finance industry and other businesses in New York are pushing President Joe Biden and Senate Majority Leader Chuck Schumer, who represents the state, to bring back the full state and local tax deduction, according to people familiar with the matter.
Schumer, who is up for reelection in 2022, has heard from business leaders across New York on multiple calls in recent weeks, these people added. Some of these people have also held talks with advisors to Biden.
Schumer, these people noted, signaled as recently as Friday that he plans to bring up the return of the full deduction when negotiations begin over reforming the tax code as a means to pay for Biden’s next initiatives, including rebuilding the nation’s infrastructure.
Some of these people declined to be named in order to speak freely about the conversations.
Schumer himself has been pushing to bring back the deduction. Schumer and his fellow Democratic New York senator, Kirsten Gillibrand, introduced a bill in January that would eliminate the SALT cap.
“Sen. Schumer has long been a supporter of the SALT deduction and vehemently opposed the punitive Trump tax bill that severely undermined it. He is looking for the best way to repeal the SALT deduction cap,” a Schumer spokesperson said.
The so-called SALT deduction was capped at $10,000 by former President Donald Trump’s tax reform bill, which became law in late 2017. Taxpayers, particularly wealthy people, in New York and other high-tax states, including New Jersey and California, saw the biggest benefits when there was no cap. SALT deductions account for taxes on the state and local levels, including property and income tax.
The cap, according to the Tax Foundation, “broadened the tax base by limiting the amount individuals could deduct in state and local taxes to $10,000. For high-income taxpayers, this cap increased federal taxable income.”
Tracy Maitland, president of investment advisory firm Advent Capital Management, told CNBC in an interview Monday that he is one of the business leaders who has engaged with Schumer and other lawmakers on bringing back the SALT deduction.
Without the full deduction, Maitland argued, New York City in particular will continue to take a big financial hit. The New York Labor Department said the state lost 1 million jobs last year at the height of the coronavirus pandemic.
“It’s important that New York remain a viable municipality. It’s a financial capital of the world. If New York becomes less of the financial capital I think it’s going to affect, not just the city, but the nation in general,” Maitland said. He later pointed to how some in the finance industry are moving to states like Florida in order to pay fewer taxes.
Kathryn Wylde, president and CEO of the Partnership for New York City, with hundreds of members that represent businesses across the city, told CNBC that Schumer addressed the need to bring back the SALT deduction during a Friday virtual fundraiser for his reelection bid.
Schumer, according to Wylde, told attendees he was planning to push for the return of the SALT deduction in the upcoming round of negotiations, which is expected to focus in part on methods to pay for Biden’s infrastructure proposal.
“I was on a call with him Friday and he said unequivocally that he couldn’t deal with it in the last bill ($1.9 trillion Covid stimulus) because there was no taxes involved but in the next one, this is definitely going to be a top priority for him,” Wylde said. “He made clear that it was a top priority,” she added, while explaining that many of her group’s members have been in touch with Schumer and Biden’s team on the need to bring back the full SALT deduction.
Wylde says in her conversations with Biden advisors that they are “sympathetic” toward calls to bring back the full deduction. People in the president’s orbit suggested to her that the reason Trump curtailed SALT in the first place was “punishment to blue states,” she said.
Members of the partnership’s executive committee include JPMorgan CEO Jamie Dimon, BlackRock CEO Larry Fink, Citigroup CEO Jane Fraser and Blackstone CEO Steve Schwarzman.
Biden will start engaging with Congress about how to pay for his infrastructure plan after he unveils it Wednesday in Pittsburgh, White House press secretary Jen Psaki said Monday.
Biden has said he wants to raise taxes on those making more than $400,000 and increase the corporate tax rate to 28% from 21%. He has yet to discuss as president where he stands on the SALT cap.
Multiple reports indicate that the Biden administration plans to use tax hikes to pay for the president’s infrastructure plan, which is expected to cost at least $2 trillion.
A representative for the White House did not return a request for comment.