Schumer Eyes Tax Cut for Wealthy Blue State Homeowners Next Year

Senator Schumer is eyeing a large tax cut for wealthy homeowners in states like California, New York, and New Jersey if Democrats can take at least some of the levers of power in this year’s election. The cap on the state and local tax deductions passed during the Trump administration is due to expire next year, and Mr. Schumer says he won’t allow Republicans to extend it. Speaking to reporters at the Democratic National Convention on Tuesday, the Senate leader said he was hoping to make an issue out of it for Democratic House candidates in his native New York. “One of the issues that people care about on Long Island is state and local deductibility,” Mr. Schumer said. “We Democrats, as long as I’m leader, when state and local deductibility expires, it will be gone.”President Trump in 2017 capped the deduction at $10,000 a household. It helped offset, somewhat, the cost of Trump’s other tax reforms. Those 2017 cuts to federal revenue, however, are due to expire next year, and could become a major issue for Trump and Vice President Harris as November nears. Mr. Schumer is most directly referring to five New York Republicans who are in danger of losing their seats this year, seats that could be critical to Democrats winning the House majority. Earlier this year, those House Republicans threatened to stall Speaker Johnson’s agenda unless he gave them at least a vote on ending what they took to calling “the marriage penalty” — referring to couples that are capped at the same deduction levels as singles. They wanted to allow spouses filing jointly to deduct $20,000. The House rejected that proposal. In February, 18 Republicans voted with the vast majority of Democrats to maintain the $10,000 deduction cap. Congressman Mike Lawler, who represents a swing district just north of New York City, said at the time that members of Congress were just playing politics. A vulnerable Long Island lawmaker, Congressman Nick LaLota, said Democrats who support either an increase in the cap or its outright abolition, but who then voted against their bill in February, were just trying to starve New York moderates of a campaign issue. One estimate from Penn Wharton found that the “marriage penalty” repeal bill — which would have retroactively applied only to the 2023 tax year — would have cost $12 billion. Mr. Schumer’s proposal to let the cap expire in its entirety would reduce federal revenues by nearly $200 billion over 10 years. Liberal members of Congress — even those from states with relatively high state and local taxes — say any changes to the state and local tax deduction provision is nothing more than a gift to those who are already wealthy. In 2021, Senator Sanders — who was then chairman of the Budget Committee — said it was “beyond unacceptable” to suspend the cap on the state and local deduction for five years, which is a proposal that some blue state House Democrats were pushing. “At a time of massive income and wealth inequality, the last thing we should be doing is giving more tax breaks to the very rich,” Mr. Sanders said. “Democrats campaigned and won on an agenda that demands that the very wealthy finally pay their fair share, not one that gives them more tax breaks.”

Schumer Eyes Tax Cut for Wealthy Blue State Homeowners Next Year

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