New York enterprise leaders urge Biden, Schumer to carry SALT deduction cap

Senate Majority Leader Senator Chuck Schumer (D-NY) (R) listens as United States President Joe Biden speaks during an American bailout event in the White House Rose Garden on March 12, 2021 in Washington, DC.

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Financial leaders and other corporate leaders in New York are urging President Joe Biden and Senate Majority Leader Chuck Schumer, who represents the state, to bring back full state and local tax withholding, according to people familiar with the matter.

Schumer, who is eligible for re-election in 2022, has heard on multiple calls from business executives across New York in the past few weeks, these people added. Some of these people have also had conversations with Biden advisors.

Schumer, these people noted, only announced Friday that he plans to secure repayment of the full deduction when negotiations begin on reforming tax law to fund Biden’s next initiatives, including rebuilding national infrastructure.

Some of these people declined to be identified in order to speak freely about the conversations.

Schumer himself tried to bring the trigger back. Schumer and his Democratic New York Senator Kirsten Gillibrand tabled a bill in January to lift the SALT cap.

“Senator Schumer has long been a supporter of the SALT deduction and has spoken out vehemently against the punitive Trump tax legislation that has severely undermined him. He is looking for the best way to lift the SALT deduction cap,” said a Schumer spokesman .

The so-called SALT deduction was limited to US $ 10,000 by former President Donald Trump’s tax reform law, which came into effect in late 2017. Taxpayers, particularly wealthy people, in New York and other high-tax countries, including New Jersey and California, saw the greatest benefit when there was no cap. SALT deductions take into account state and local taxes, including property and income taxes.

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The cap, the Tax Foundation said, “broadened the tax base by capping the amount that individuals could deduct from state and local taxes to $ 10,000. For high-income taxpayers, that cap increased federal taxable income.”

Tracy Maitland, president of investment advisory firm Advent Capital Management, told CNBC in an interview Monday that he is one of the business leaders who worked with Schumer and other lawmakers to bring back the SALT trigger.

Without the full deduction, Maitland said, New York City in particular will continue to enjoy great financial success. The New York Department of Labor said the state lost 1 million jobs last year at the height of the coronavirus pandemic.

“It is important that New York remains a viable community. It is a financial capital of the world. If New York becomes less financial capital, I believe it will affect not just the city but the nation in general,” Maitland said. He later pointed out that some in the financial industry are moving to states like Florida to pay less taxes.

Kathryn Wylde, president and CEO of the New York City partnership, with hundreds of members representing businesses across the city, told CNBC that Schumer raised the need to use the SALT trigger during a virtual fundraiser Friday for his re-election offer bring back.

According to Wylde, Schumer told attendees that he plans to push for the return of the SALT deduction in the upcoming round of negotiations, which will likely focus in part on the payment methods for Biden’s infrastructure proposal.

“I had a call with him Friday and he clearly said that he couldn’t handle it in the last bill ($ 1.9 trillion Covid stimulus) because there was no tax, but the next one it will definitely be its a top priority for him, “said Wylde. “He made it clear that this is a top priority,” she added, explaining that many members of her group had contacted Schumer and Biden’s team to bring back the full SALT trigger.

Wylde says in her conversations with Biden consultants that they are “sympathetic” to calling to bring the full trigger back. People in the president’s orbit suggested that the reason Trump restricted SALT in the first place was because of “punishing the blue states,” she said.

The partnership’s executive committee includes JPMorgan CEO Jamie Dimon, BlackRock CEO Larry Fink, Citigroup CEO Jane Fraser and Blackstone CEO Steve Schwarzman.

Biden will speak to Congress about how to pay for his infrastructure plan after unveiling it in Pittsburgh on Wednesday, White House press secretary Jen Psaki said Monday.

Biden has said he wants to raise taxes for those who earn more than $ 400,000 and raise the corporate tax rate from 21% to 28%. As president, he still has to discuss where he is on the SALT cap.

Several reports indicate that Biden’s administration plans to use tax increases to pay for the president’s infrastructure plan, which is expected to cost at least $ 2 trillion.

A White House representative did not return a request for comment.