Tax Deduction That Benefits the Rich Divides Democrats Ahead of Vote

The plan by House Democrats to reduce taxes for high earners in states like New Jersey, New York and California is becoming an early political albatross for the party.

The challenge that Democrats face when local politics collide with the party's national ambitions to promote economic equity is highlighted by the criticism. The proposal by Democrats to raise the limit on the state and local tax deduction is an opportunity for Republicans to cast Democrats as the party of the rich.

Kevin Brady, the top Republican on the House Ways and Means Committee, said that they are providing a huge tax windfall under the cap on state and local taxes. If your priorities are working families, make that the priority, not the wealthy.

The amount of state and local taxes that households could deduct from their federal tax bills was capped by Republicans. Democrats from high-tax states like New York, New Jersey and California have spent years promising to repeal the cap and are poised to lift it to $80,000 through 2030. The cap would be gone in 2032.

The bill would cut taxes sharply for the next five years by increasing the value of the deduction, but it would mean higher taxes in the following five years than if the cap were allowed to expire. The Congressional Budget Office said on Thursday that the changes to the deduction would result in a tax increase that would raise about $14.8 billion in revenue.

The Senate has its own advocates and detractors, so the House proposal is likely to change there. The majority leader of the Senate, Chuck Schumer of New York, has embraced a more generous deduction, while the chairman of the Senate Budget Committee, Vermont independent Senator, Bernie sanders, has criticized the House proposal. He and Senator Bob Menendez, Democrat of New Jersey, were in talks about an income cap of as high as $550,000.

The National Republican Congressional Committee released survey data this week that said most voters in battleground states would be less likely to vote for Democrats who supported a policy that gave tax cuts to rich homeowners in New Jersey, New York and California. The Democratic Party would have to defend its politically toxic policies which penalize hard working families.

Prominent tax and budget analysts have argued that expanding the deduction was an unnecessary handout to the rich.

A middle-class family with four children would receive 10 times the tax relief next year from expanding the state and local tax deduction as a family with four children would receive from another provision in the social policy package, according to the Committee for a Responsible Federal Budget. The group said that two thirds of households making more than $1 million a year would get a tax cut because of the legislation.

Some Democrats were put on the defensive by the proposal.

Golden said this week that tax breaks for millionaires sounded like something Republicans would have come up with.

The bill known as the Build Back Better Act has been said to tax the rich. The more we learn about the provisions, the more they look like a tax break for millionaires.

Democrats are trying to get the bill through both the House and Senate without Republican support, but the issue is complicating that. Democrats can't afford to lose more than three votes in the House and none in the Senate.

Some Democrats in Congress from states with high taxes want the more generous deduction included in the bill.

The chairman of the House Ways and Means Committee said that something has to be in there.

The tight race for governor of New Jersey shows that voters are worried about the high property taxes and limit on deductibility.

According to Michael DuHaime, a Republican political strategist with Mercury Public Affairs, taxes are the top issue in New Jersey.

In the suburbs of New York City, the SALT cap resulted in a large tax increase for a lot of families. The homeowners are counting on some relief with Democrats in power.

New Jersey has become more concerned about its affordability now that Donald J. Trump is no longer in office, said Julie Roginsky, a strategist who advised the governor. She said that the average homeowner in the state pays about $10,000 in property taxes.

Some vulnerable members of Congress need to draw a line in the sand.

Several Democrats who represent affluent suburban areas where most homeowners pay much more than $10,000 a year in property taxes will face stiff challenges in the upcoming election. Their short list of vulnerable House members include Josh Gottheimer, who represents part of the Jersey Shore, and Tom Malinowski, who is from North Jersey.

If the Democrats are able to change the SALT deduction to cover taxes in the future, those who have provided a tax cut will be able to campaign on it. She said that if they fail, their Republican opponents will be able to use that against them.

Several House Democrats who represent affluent suburbs, including the one in New Jersey, are expected to face stiff challenges in next year's elections.

If you are Nancy Pelosi, you know that the road to your majority runs through places like suburban New Jersey and suburban California.

Ben Dworkin, the director of the Rowan Institute for Public Policy and Citizenship at Rowan University in Glassboro, N.J., cited the close race for New Jersey governor this year. Jack Ciattarelli was playing to voters' feelings about the state's high taxes.

Mr. Dworkin said that he hammered home the issue.

He said that public polling showed that affordability was the top issue in the state.

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Mr. Dworkin said that a change in the SALT cap would be a huge benefit.

Jon M. Bramnick, the minority leader in the State Assembly, said he would be happy if the Democrats provided tax relief to New Jersey residents.

If the Republicans stand up to them and get it done, I will be proud of their work.

The cap on the deduction meant an increase in the cost of living, which led to people moving away from New Jersey. He argued that lifting the cap was not a tax cut for the rich in his state.

If other states or districts don't want it, I don't have to fight for it. If you come to my state, this is a threat.

The economic impact of the cap in high-tax states is not as clear as those who support raising it suggest.

The current proposal would cause millionaires to pay higher taxes in the second half of the decade, according to Daniel Hemel, a law professor at the University of Chicago.

He argued that Republicans were being disingenuous in their attacks because of the structure of the tax cut four years ago.

Mr. Hemel said that any Republican who voted for the tax law lost the ability to criticize liberals for tax policy.

Emily contributed to the report.