Mar-a-Lago meetings to include an offer on SALT cap

The incoming Trump administration plans to offer an expansion of the state and local tax deduction to Republican lawmakers from New York, New Jersey and California who are heading to Mar-a-Lago on Saturday for a sit-down with the president-elect.

While exact details weren't available, one proposal being discussed would allow married couples to deduct $20,000 of their state and local taxes from their federal income taxes. Under current law, married couples can deduct only $10,000, which is the same for single taxpayers.

In return, the so-called SALT Republicans will be expected to fall in line behind a sweeping tax bill the GOP hopes to enact later this year, two sources familiar with the new administration’s thinking told POLITICO, who were granted anonymity to discuss the internal strategizing.

The lawmakers — who represent politically competitive, high-tax districts where constituents have been dinged by the SALT cap — haven't ruled out pushing for other changes, though.

The talks will be just one part of a broader set of discussions President-elect Donald Trump plans to hold in Florida this weekend that will also include members of the House Freedom Caucus and the chairs of important House committees.

However, the outcome of the conversations with SALT Republicans promises to be particularly important for the GOP’s plans to pass an extension of expiring provisions of the tax cuts enacted during Trump's first administration.

Members of the coalition stalled tax legislation in the 118th Congress several times over their demands for SALT relief, which is otherwise widely unpopular in the Republican conference. And, in the GOP’s slim two-seat majority, the group now wields tremendous leverage again — and House leadership knows it.

The issue “will definitely come up. I think that’s a big sticking point for the members that will be there,” said Rep. Nicole Malliotakis (R-N.Y.), who is part of the SALT caucus and also a member of the tax-writing House Ways and Means Committee.

Malliotakis said that New York Republicans would be meeting on Wednesday to go over their strategy ahead of the meetings in Florida.

“We’re going to go over the impact SALT has had in each of our districts, how many people take SALT versus the standard deduction, what are the income levels that are affected,” said Malliotakis.

Rep. Mike Lawler (R-N.Y.) confirmed to POLITICO on Tuesday that he would also be part of the group of lawmakers making the pilgrimage to Mar-a-Lago.

We’re going to “have broad discussions but obviously SALT will be part of it,” Lawler said.

It’s possible that the group will push for something more than doubling the deduction for married couples, which the lawmakers call a "marriage penalty." The New Yorkers are quick to point out that Trump himself pledged at a campaign rally in Long Island to expand SALT relief — and that the blue districts they represent are some of the most competitive in the country.

Former New York Republican Rep. Marc Molinaro, who lost his reelection last year, told POLITICO in December that voters might have returned him to Congress if Republicans had achieved something on SALT.

“I think the logical way to do it is to, at a minimum, double it and get rid of the marriage penalty elements of it,” said Molinaro. “What I would say is that’s the floor, I think, from a constituent’s perspective, from a voter’s perspective.”

Malliotakis said that changes in the alternative minimum taxes for upper-income taxpayers, which would further erode the value of the SALT deduction and were repealed in 2017, "cannot come back."

"That's a red line for me," she said.

House Ways and Means Chair Jason Smith (R-Mo.), who will lead the charge on tax policies this year, has acknowledged Trump's desire to address the SALT cap. Yet, Smith has also asserted that Republicans cannot fully repeal the limit, which they put in place in 2017 to help pay for their Tax Cuts and Jobs Act in 2017.

The non-partisan Committee for a Responsible Federal Budget estimated in 2021 that a full repeal of the cap would cost $900 billion.

“That’s how [Trump] does things differently,” Smith told POLITICO, referring to the meetings scheduled for Mar-a-Lago. “He’s going to have all the committee chairmen down there on Saturday, too, the Freedom Caucus, so being there to listen to him.”