Senate Budget Committee Chairman Bernie Sanders’ wants more money for a tax break he has described as “for rich people in blue states” than he does for roads and bridges.
Sanders’ $6 trillion budget resolution is billed as the Democrats’ more progressive and “economically sweeping version” of an infrastructure package compared to narrower bipartisan negotiations. Yet Sanders’ “infrastructure” package would spend $20 billion more on regressive SALT cap relief than it would on roads and bridges.
According to a draft budget outline, Sanders’ plan allocates $120 billion for raising the state and local tax (SALT) deduction cap, a tax provision which Sanders himself previously admitted “sends a terrible, terrible message” to “working families.” In contrast, the plan would spend only $100 billion on roads and bridges.
Sanders’ prioritization of the SALT cap over roads and bridges demonstrates what little interest Democrats have in actual infrastructure and are instead focused on a grab bag of progressive priorities designed to reward Democrat constituencies.
The SALT deduction permits individuals to write-off some of their state and local taxes when filing at the federal level. In 2017, the Republican Tax Cuts and Jobs Act (TCJA) capped the deduction at $10,000 in order to pay for much needed tax relief for working- and middle-class Americans. The change to the SALT cap left most Americans unaffected but did impact wealthy people living in high-tax, blue states like California and New York—aka the Democratic donor class.
Despite its extreme regressively, congressional Democrats have been pushing to repeal the SALT cap from day one. According to the nonpartisan Tax Foundation, prior to the TCJA, 91 percent of the benefit of the SALT deduction went to people making over $100,000 per year. Even the left-leaning Tax Policy Center notes 70 percent of the benefit of SALT cap repeal would go to those making more than $500,000 per year; 96 percent of middle-income households would receive no benefit at all, and the return for those who do would be vanishingly small.