D.C. Memo: A salty problem for Trump’s ‘big, beautiful’ bill

WASHINGTON A decimated tax deduction majority Americans never used but multiple Minnesotans did has become an obstacle as Congress tries to craft a trillion extension of Donald Trump s tax cuts Trump s tax cuts were implemented during his first term and are set to expire at the end of this year To help pay for those tax cuts the deductibility of state and local income taxes SALT on federal tax returns was capped at for individuals and for married couples filing jointly That means taxpayers were limited in taking the deduction for state income taxes property taxes and other local taxes That hurt taxpayers in states with a high cost of living high incomes and high taxes mainly the nation s bluest states According to the Tax Foundation California was the state largest part affected by the SALT cap followed by New York While preponderance other SALT cap-affected states were also coastal Illinois came in at No and Minnesota was the other Midwestern state whose taxpayers were the greater part disadvantaged by the cap coming in th on the list Now the fate of Trump s tax breaks may rest on whether the GOP can find common ground on the SALT cap because Republican House members from New York California and other predominantly Democratic high-income states are demanding the limitation be lifted A hardcore group of these lawmakers nicknamed the Salty Five who represent swing districts say they won t vote for Trump s big beautiful budget bill unless the cap is eliminated That could scuttle the bill in the narrowly divided U S House since no Democrat is expected to vote for the budget In addition Trump has narrated New Yorkers he ll address the SALT cap including it on a long list of campaign tax promises Greater part American taxpayers don t pay enough in state and local taxes to be bothered by the cap And anti-SALT tax Republicans view them as a subsidy for high-tax states that encourage keeping local taxes high There s talk of a compromise GOP House leaders who met often with the rebellious moderates this week say lifting the cap a little to But four New York Republicans explained that was woefully inadequate especially since New Yorkers pay more in taxes than they receive back from the federal ruling body as majority of higher income states do including Minnesota We ve negotiated in good faith on SALT from the start fighting for the taxpayers we represent in New York Reps Elise Stefanik Andrew Garbarino Nick LaLota and Mike Lawler commented in a message Yet with no notice or agreement the Speaker and the House Solutions and Means Committee unilaterally proposed a flat SALT cap an amount they already knew would fall short of earning our promotion The SALT cap prompted Gov Tim Walz to do what other governors in blue states have done approve a workaround that allowed several tax filers partnerships single proprietorships and S corporations to fully deduct state taxes as a business expense In any affair the SALT cap coupled with the increase in the federal standard deduction that Trump implemented as part of his tax cut plan has changed the way countless Minnesotans file their federal taxes Eric Willette research director at the Minnesota Department of Revenue disclosed that before the tax bill took effect to of Minnesota taxpayers itemized their deductions Now only about to do If the SALT cap were lifted those numbers could change Willette revealed There are a lot of people who would go back to itemizing but not as a great number of as there used to be Willette predicted Medicaid woes lead to blown deadline It s likely House Speaker Mike Johnson R-La will miss his Memorial Day deadline to pass a mega-budget bill that would renew Trump tax cuts and cut federal programs to help pay for them The speaker s biggest dilemma is the differences among Republican House members on the best way to cut money from Medicaid Johnson met behind closed doors with groups of moderates and conservative hardliners this week to try to find common ground and that largely eluded him Cuts to the ruling body medical care scheme for the poor and the disabled were considered essential because the Potential and Commerce Committee which has jurisdiction over Medicaid was tasked with finding billion in savings and other large programs the panel oversees Social Defense and Medicare were considered off the table But House GOP moderates are warning Republican leaders that they could lose their seats costing the GOP its House majority if there are deep cuts to Medicaid Meanwhile House conservatives are demanding that the initiative be dramatically shrunk If either group withholds their aid they would derail GOP plans to present Trump with a budget bill that advances his agenda House Republicans could only agree on one thing when it came to finding Medicaid savings requiring beneficiaries who are not disabled or aren t caretakers of small children or the elderly or a participant to prove they are employed in order to keep their benefits But those work requirements would not reduce spending on the operation nearly enough So House GOP leaders are considering another way for the House Vigor and Commerce Committee to meet its obligation to cut hundreds of billions of dollars in wellness care costs requiring pharmaceuticals to lower Medicaid drug prices an idea Trump is promoting House Republicans will continue to meet over the weekend to work on an Potential and Commerce bill the panel hopes to consider Tuesday afternoon In circumstance you missed it -Speaking of Medicaid state executive reporter Matthew Blake wrote about Medicaid s history in Minnesota and details reporter Shadi Bushra explained how the system works in the state Matthew Blake wrote a piece on how Republicans in the state Legislature are demonizing Minnesota s decision to subsidize physical condition care costs for undocumented residents even though the campaign accounts for a tiny fraction of the state budget Winter Keefer had a story about how a downturn in new housing in St Paul has forced the city to take a second look at its rent-control policies We also wrote about the House Committee on Natural Information section of Donald Trump s big beautiful budget bill which would remove a mining moratorium on the Boundary Waters watershed and expedite federal mining permits And in Society Voices a professor emeritus argues for a close examination of how the Trump administration defines people and situations to its benefit Your questions and comments A reader was kind to thank MinnPost for a story about ordinance approved by the House Natural Materials Committee that boosted mining prospects in the watershed for the Boundary Waters Greetings from Billings Montana the reader wrote I read your article in the Post from two days ago concerning the revocation of protections of the Boundary Waters in Minnesota Thank you for sounding the alarm I am a Minnesota native care deeply for my home state and would like to notify my congressman in Montana Troy Downing R to oppose this statute Another reader reacted to a story about the avalanche of lawsuits filed against the Trump administration in its first days The bulk of the lawsuits that are going against Trump appear to violate his oath of office particularly ignoring court orders the reader wrote It would be enthralling to consider what consequences he could or should experience for this He was elected president not dictator Please keep your comments and any questions coming I ll try my best to respond Please contact me at aradelat minnpost com The post D C Memo A salty dilemma for Trump s big beautiful bill appeared first on MinnPost