White House press secretary Jen Psaki refused Wednesday to rule out tax cuts for people with incomes above $400,000 in President Biden’s nearly $2 trillion social and environmental spending bill — despite resistance from leftists led by Sen. Bernie Sanders.
The issue is a sticking point among Democrats, as either centrists or self-declared socialists in the party can tank the legislation in the evenly divided Senate and narrowly divided House.
“The president has said he wouldn’t sign any tax hikes on people making less than $400,000 a year. Is he also committed to ruling out any tax cuts for people making more than $400,000 a year?” National Public Radio’s Mara Liasson asked Psaki during the White House press briefing.
“His bar continues to be he is not raising taxes on anyone making less than $400,000 a year,” Psaki answered. “There are ongoing negotiations, as you know, about the SALT [state and local tax] deduction — not something that the president proposed, but something … there’s obviously support for and we obviously want to get this legislation moving forward.”
“We expect the final legislation will address some of the most unfair results of the 2017 tax law SALT provision, particularly impact on middle class taxpayers,” Psaki added.
“But again, his bar has not changed, we of course wants to cut taxes for people —”
“Including people who make over $400,000?” interjected Liasson, who also is a Fox News contributor.
“Again, this is not a proposal that the president proposed himself,” Psaki said. “But it is something as you know, that there’s support for, different versions of it, in Congress. It’s currently being negotiated. Our objective is not raising taxes on anyone making less than $400,000 per year and cutting costs.”
“But can you explain why a tax cut for people making more than $400,0000 is still somehow commensurate with his values of protecting middle-class people?” Liasson asked. “It just doesn’t make any sense.”
“How does it not make sense?” Psaki retorted.
“Why would he be OK to give a tax cut for someone making more than $400,000?” Liasson reiterated.
“Is that raising taxes on someone making less than $400,000?” Psaki asked skeptically.
“So that’s all you promised?” Liasson asked. “Just no tax hikes for somebody under $400,000. Tax cuts for people over that — that’s possible?”
Psaki closed the protracted exchange by arguing that “the totality of the bill” would benefit the non-rich via new subsidies for healthcare, childcare and preschool.
Biden did not propose a repeal of the $10,000 SALT deduction cap, which limits the amount of state and local taxes that can be deducted before paying federal taxes, as part of his social spending bill. However, a group of House Democrats from high-tax states like New York and Jersey demanded its inclusion in the measure which passed the House last month.
Experts say repealing the SALT deduction cap would be a boon to both middle-class and upper-income residents of high-rate states. With that in mind, Rep. Tom Suozzi (D-NY) organized a “no SALT, no deal” pledge with allies including Rep. Josh Gottheimer (D-NJ).
Sanders (I-Vt.) has insisted that there be no SALT break going to people with an annual income over $400,000, while Sen. Bob Menendez (D-NJ) wants a higher threshold at $550,000. Negotiations between the two over the issue have apparently stalled.
Supporters of repealing or altering the SALT deduction cap argue that the cost of living and salaries are higher in the New York City region and the area should want to keep rich taxpayers rather than spur their departure.
Democrats hope to pass Biden’s sprawling bill before Christmas and the SALT fight isn’t the only dispute that could kill that plan. Sen. Joe Manchin (D-WVa.), for example, has repeatedly cited his concern about high inflation and what he calls budget gimmicks to make the cost of new programs seem lower than they actually are.