A bloc of New York Republicans withholding support for their party’s nominee for speaker of the U.S. House of Representatives wants to repeal a key portion of Trump-era tax reforms that disproportionately affect high-tax states like New York.
Reps. Anthony D’Esposito, Andrew Garbarino and Nick LaLota of Long Island, as well as Hudson Valley Rep. Michael Lawler — declined to support Ohio Rep. Jim Jordan in any of the three roll call votes held for speaker this week.
A fifth New York Republican, Rep. Marc Molinaro of the Hudson Valley, didn’t back Jordan on his third ballot on Friday after voting for him in the previous two rounds.
Lawler, D’Esposito, Garbarino and LaLota have all said a speaker candidate could win their backing in part by supporting the repeal of the federal cap on state and local tax deductions — better known as the SALT cap. Molinaro didn’t specifically point to SALT as his reason for flipping against Jordan, but he sponsors a bill that would eliminate the cap.
All five New York lawmakers represent congressional districts expected to be competitive in the 2024 election cycle, when Democrats hope to win back some of the seats they lost in last year's midterm elections. Those losses almost singlehandedly tipped the balance of power in the House to GOP control.
The Republican representatives are betting that pushing for repealing the SALT cap — which allows people to deduct only up to $10,000 of their state and local taxes from their federal tax calculations, or $20,000 if filing jointly — will play well with their higher-earning constituents. Many of those constituents were hit with higher tax bills when the cap was installed to help pay for the Trump tax reforms in 2018.
“As a unified front representing Long Islanders, we remain steadfast that the next speaker of the House prioritize our neighbors’ concerns, particularly: SALT cap relief, 9/11 health care funding, flood insurance legislation, and assurances that we curb runaway federal spending in a responsible manner that averts any potential government shutdown,” LaLota, Garbarino and D’Esposito said in a joint statement on Thursday.
The SALT cap has been a point of bipartisan consternation for some high-level New York elected officials since the Trump tax cuts were passed.
The cap applies to people who itemize their federal tax returns and don’t take the standard deduction. If a taxpayer paid $15,000 in, say, local property taxes and state income tax, they would only be able to deduct the first $10,000 from their income on federal tax returns — meaning they would have to pay federal taxes on the remaining $5,000 in income. The cap therefore has a greater effect on people with higher incomes.
Before the Trump tax reforms, the entire amount paid in state and local tax could be deducted on federal tax returns.
In 2018, then-New York Gov. Andrew Cuomo made a near-daily point of speaking out against the SALT cap, going as far as to sue the federal government. Cuomo argued that the cap unfairly targeted Democratic states and infringed on their constitutional right to tax as they see fit. (The suit was unsuccessful.)
Last April, Molinaro and Garbarino joined with Democratic Rep. Josh Gottheimer of New Jersey, another high-tax state, to introduce their bill repealing the cap altogether.
The House GOP members from New York — particularly the three from Long Island — acknowledged they pushed for SALT changes in private talks with Jordan supporters.
Citing a California representative who supports repealing the cap, Bloomberg Tax reported on Wednesday that Jordan told the New York holdouts he would support doubling the cap to $20,000 for single filers and $40,000 for joint filers. But Garbarino says no firm offer was made.
“We are having discussions about possibly getting a vote on SALT,” Garbarino said at a Punchbowl News event Thursday. “It’s very important. … No offers have been made. No offers have been rejected. As other people have said, discussions are ongoing.”
House Democrats, meanwhile, are delighting in the Republicans’ dysfunction, making clear they intend to use it to their advantage on the campaign trail next year.
“Any chance they get, Nick LaLota and Anthony D’Esposito choose to grandstand politically and put the attention on themselves rather than focus on working for Long Islanders,” Ellie Dougherty, a spokesperson for the Democratic Congressional Campaign Committee, said in a statement this week.
Repealing or increasing the SALT cap would come with a significant cost.
In what it termed a preliminary estimate, the D.C.-based Tax Foundation, a think tank, found doubling the cap would cost the federal government about $54 billion through 2025, since, overall, people would be paying less in federal taxes.
Those who earn more than $100,000 a year would benefit most, according to the Tax Foundation. After-tax income for more than 60% of those making more than $250,000 a year would increase in 2024, for example, but would only increase for 5.3% of those making between $75,000 and $100,000.
Meanwhile, less than 2% of filers making less than $75,000 would benefit, according to the think tank's estimate.
So far, the three Long Island holdouts have all cast their speaker ballots for former Rep. Lee Zeldin, a fellow Long Islander whose strong showing as a candidate for New York governor last year helped buoy Republican congressional candidates. Molinaro joined them in voting for Zeldin on Jordan’s third ballot.
Lawler, a freshman lawmaker among the Democrats’ top targets in 2024, voted for Interim Speaker Patrick McHenry on the third ballot, after voting for deposed former Speaker Kevin McCarthy on the first two.
In an interview earlier this week, the Times Union of Albany asked Lawler what might be able to sway him to Jordan’s side.
“There are key issues that matter to me and my constituents, including raising the cap on SALT,” Lawler told the newspaper. “But again, it’s not me individually — it is a question of whether or not we can build consensus within the conference. And as of right now, he can’t.”
By Friday afternoon, the House Republican conference voted in private to drop Jordan as its nominee, according to numerous reports. The next step in the race for House speaker remains unclear.
