Blue-state homeowners may be miffed that Democrats failed to scrap the $10,000 cap on state and local tax deductions as part of President Biden’s Inflation Reduction Act — but they should instead be relieved that the cap wasn’t extended further, political insiders tell The Post.

That’s because political will within the Democratic leadership to repeal so-called SALT caps imposed by the Trump administration is simply not there when it comes to the plight of middle-class homeowners in high-tax states like New York, New Jersey and California, according to sources.

“It’s a doomed issue because (Chuck) Schumer and (Nancy) Pelosi will not prioritize it — and no matter how important it is for middle-class taxpayers the SALT cap isn’t strong enough to unite the base,” James Lucier, managing director of Washington-based policy research firm Capital Alpha, told The Post. “This isn’t the issue that wins out.”

The $10,000 cap, imposed in 2017 as part of the Trump tax cuts, will sunset in 2025. During negotiations in the Senate on the $737 billion spending bill, Republicans like South Dakota Sen. John Thune floated the idea of extending the cap beyond 2025.

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The debate over SALT isn’t going anywhere, tax experts told The Post.
Bloomberg via Getty Images

In the House, members of the so-called “SALT Caucus” — Rep. Josh Gottheimer (D-NJ) and Rep. Tom Suozzi (D-NY) — pushed for the cap to be moved up to at least $75,000, but they eventually bowed to pressure from Pelosi to pass the bill.

“The no-SALT, no-deal caucus was saved from insult to injury — the cap wasn’t lifted but it wasn’t extended,” Lucier said.

While the Inflation Reduction Act was mainly focused on hiking taxes on corporations and doling out green subsidies — not changing the tax code on individuals — the lost SALT cause highlights just how few Congressional members are committed to easing the burden on homeowners in high-tax states.

Publicly, the Speaker has backed her blue-state brethren, claiming the cap on SALT deductions is unfair to residents of states like hers, in California, and New York — both of which have been getting slammed by a steady exodus of well-heeled residents to more tax-friendly venues like Florida and Texas.

But people close to Pelosi say she feels the need to appease the progressives in her caucus far more than the moderates — and that progressive are so strong they don’t feel the need to compromise with moderates.

Progressive firebrand Rep. Alexandria Ocasio-Cortez (D-NY) previously made headlines for calling SALT relief “a gift to the billionaires.”

The missed opportunity to scrap the cap could come back to haunt Democrats in the upcoming midterms and the presidential election in 2024, Lucier warned.

“The pot is overheating on the back burner for the next few years. . . it’s not going away,” he said.



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