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Northeast Dems Threaten to Block Biden’s Infrastructure Package Unless Tax Deductions Included

Democratic lawmakers in recent days have criticized facets of President Biden’s $2.3 trillion infrastructure plan, including northeastern representatives who say they will not support any bill that does not remove the caps on state-and-local-tax deductibility.

As it stands, the bill does not include language to remove the caps, which were set at $10,000 in the 2017 tax law.

While House Speaker Nancy Pelosi (D., Calif.) said she was sympathetic to that idea, according to the Wall Street Journal, the White House has said lawmakers should propose a way to fund the deduction.

In a letter to Treasury Secretary Janet Yellen last week, a group of Democratic lawmakers from New Jersey, New York, and Minnesota indicated that they “could not vote for a bill that has a meaningful tax impact on our constituents unless it restores SALT deduction relief to our middle-class families.” 

Representative Tom Suozzi (D., N.Y.) was one of the signatories, and while Punchbowl News suggested the letter was less strict than his previous “No SALT, no deal” stance, the New York Democrat said there was “no softening” in his position.

 “No SALT, no deal,” he reiterated to the newsletter.

However, other Democrats in the group reportedly acknowledged to Punchbowl News that they “do not have a real strategy and that they will likely vote for the deal even if the SALT provision isn’t included.”

Meanwhile, a number of Democrats have been critical of Biden’s proposed tax increases on corporations as part of the infrastructure plan that would raise the corporate tax rate to 28 percent from 21 percent and increase taxes on companies’ foreign earnings. 

The White House said the tax increases would cover the cost of the $2.3 trillion package over 15 years. The measure proposes funding improvements to roads, bridges, and transit systems, as well as expanding broadband access and other efforts.

However, some members of the president’s own party have instead recommended borrowing money to pay for the investments in the bill or raising other levies, such as the gasoline tax.

Representative Peter DeFazio (D., Ore.), the chairman of the House Transportation and Infrastructure Committee, indicated he did not believe paying the entire cost of the plan through tax increases was necessary, according to the Journal. DeFazio said he would back an increase in the gas and diesel tax to pay for the new investments, in addition to more borrowing. 

Still, the White House and a number of other Democrats don’t support increasing the gas tax or collecting revenue from electric vehicles. They have argued that the taxes disproportionately affect lower-income people could discourage greener transport.

Even with a Democratic majority, Biden will have a difficult time passing the legislation if he cannot garner near-unanimous support in the party to move the measure forward without Republican votes.

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