The news about Joe Manchin and Chuck Schumer reaching agreement on major legislation is a very big deal.
Passage is not assured, but this bill would do a lot of things Democrats have wanted for years. They include lowering drug prices by allowing Medicare to negotiate with pharmaceutical companies, fight climate change, award generous tax credits for the purchase of electric cars and institute a 15 percent minimum tax on major corporations that otherwise would pay little or no taxes.
If it passes the 50-50 Senate, Speaker Nancy Pelosi has been quoted as saying it will pass the House.
OK. But by how many votes?
At the moment all those good things do not include something many House Dems from New Jersey and New York have been demanding since 2019 – bringing back the full deduction for state and local taxes – or SALT.
Prior to the 2017 tax reform act, residents were able to deduct all state and local taxes when paying their bill to the feds. But the new law capped the deduction at $10,000.
That may mean little, or nothing at all, if you live in Iowa, Tennessee, or most states other than New Jersey and New York.
But in the Garden State, many pay much more than $10,000 in property taxes alone. Some have argued that the benefits of the 2017 act – such as a higher standard deduction – outweigh the pain of instituting the cap, but that’s unlikely.
Recall, if you will, that such then-House Republicans as Rodney Frelinghuysen and Leonard Lance opposed the 2017 law primarily because of the $10,000 cap.
Getting rid of the cap initially was blocked by the Republican-controlled Senate. But now Dems control both houses.
Cap elimination was included in the Build Back Better bill, but that fizzled with Manchin’s “help.”
Now, Manchin is on board with a less ambitious bill than Build Back Better, but this measure does not eliminate the cap.
I asked Rep. Mikie Sherrill about this Tuesday evening as she attended a National Night Out event in Boonton Township.
Sherrill was straight forward about not voting “yes” on a bill unless it includes no more SALT cap. But she also said she’s hoping eliminating the cap will be in the final bill, noting, in effect, that nothing is done until it is done.
“That’s what we’re waiting on,” she said as she chatted with law enforcement personnel and others assembled on a ballfield on a lovely summer evening.
“There’s kind of this grand vision that gets put out and then the sausage gets made.”
The political ramifications here are obvious.
If SALT does not get done, there will be many reasons why, one of which is a belief elsewhere in the country that people in New Jersey are “rich” and don’t need the benefit.
But no one in New Jersey is going to campaign by telling voters they’re too rich.
The overall bill, as stated, does many things to help average residents, specifically by moving to reduce drug costs.
But if the SALT cap is still there in October, House GOP candidates will have a great time talking about how Democrats failed to get the cap removed.