The California Association of Realtors praised the passage of the bill, which lifts the cap imposed by Trump’s 2017 tax reform.
The U.S. House of Representatives on Thursday narrowly passed a temporary two-year repeal of the $10,000 cap imposed on state and local tax deductions (SALT), one of the changes to the tax code imposed by President Donald Trump’s 2017 tax reform.
The bill, which passed by a slim margin of 218 to 206, mostly along party lines, will likely die in the Republican-controlled Senate. Trump has also said he would veto the bill, according to the New York Times.
While support of the repeal came mostly from Democrats, not all supported the bill as it was written, with some saying it would disproportionately favor more affluent Americans. Progressive-leaning think tank Center on Budget and Policy Priorities published a study on the bill on Dec. 10 and came to the same conclusion.
“By itself, repealing the SALT cap would overwhelmingly benefit high-income households, since most low- and middle-income taxpayers don’t face the SALT cap,” the study reads. “In addition, paying for repeal by raising the top rate would use up a source of progressive revenue that would no longer be available to fund other, more critical priorities.”
With the two-year repeal of the cap, Republicans added an amendment that would keep the cap for taxpayers earning more than $100 million per year and direct the additional funds to a tax break for blue-collar workers like teachers. To offset the overall revenue loss from the repeal, Democrats slightly raised the top tax rate, from 37 percent to 39.6 percent.
The real estate community praised the passing of the bill, saying the cap hurt both taxpayers and the industry.
“We are pleased that the House has passed a bill to temporarily eliminate the cap on the amount of state and local tax that taxpayers can deduct on their federal tax returns,” California Association of Realtors President Jeanne Radsick said in a statement. “The combined hit of a reduction in the mortgage interest deduction and current $10,000 SALT cap in the tax law has disproportionately hurt taxpayers and real estate in California.”
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