Republican representatives from blue states blasted a Senate proposal to reduce the state and local tax deduction (SALT) maximum from the $40,000 level negotiated by the House to $10,000 and perhaps reduce Medicaid in order to fund President Trump’s “big, beautiful bill,” claiming it would be “dead on arrival.”
A leaked draft of the Senate Finance Committee’s language for its amendments to the One Big Beautiful Bill Act showed that the body intended to remove the SALT hike as a stopgap measure while negotiations proceeded.
“I have been clear since Day One: sufficiently lifting the SALT Cap to deliver tax fairness to New Yorkers has been my top priority in Congress,” Rep. Mike Lawler (R-NY) stated.
“After engaging in good faith negotiations, we were able to increase the cap on SALT from $10,000 to $40,000. That is the deal, and I will not accept a penny less. If the Senate reduces the SALT number, I will vote NO, and the bill will fail in the House.”
Using a meme of Steve Carell as Michael Scott from “The Office” shaking his head, Lawler once again took aim at X, stating, “Consider this the response to the Senate’s “negotiating mark”: DEAD ON ARRIVAL.”
The Senate version of the plan will also prohibit states from collecting more federal assistance for Medicaid through health care provider taxes.
States were prohibited from increasing health care provider taxes over the current 6% rate by the House-passed measure.
However, the plan from the Senate Finance Committee gradually reduces the tax rate in states that have expanded Medicaid, starting at 6% in 2027 and going down to 3.5% in 2031.
When questioned about the Medicaid reforms in the Senate’s proposal, a moderate House Republican told Politico, “Hell no.”
Some conservatives believe that federal Medicaid spending is influenced by health care provider taxes, and that reducing them would reduce the expansion of the entitlement program and save money.
The One Big Beautiful Bill Act was passed by the House last month, but before it reaches President Trump’s desk, the megabill must first pass the Senate and then the House again.
Republicans elected from high-tax blue states where SALT is a major problem are not represented in the Senate, in contrast to the House. The addition of a SALT hike has been the subject of outspoken criticism from some Senate Republicans.
“I think at the end of the day, we’ll find a landing spot.” Senate Majority Leader John Thune (R-SD) stated, “Hopefully that will get the votes we need in the House, a compromise position on the SALT issue,” suggesting that the upper house is not in favor of a significant increase in the SALT cap.
The SALT Caucus in the House is made up of Republicans from blue states who have made a commitment to support the One Big Beautiful Bill Act in exchange for an increase in the SALT cap.
According to a statement from Rep. Nicole Malliotakis (R-NY), the $40,000 SALT deduction was carefully negotiated.
“For the Senate to leave the SALT deduction capped at $10,000 is not only insulting but a slap in the face to the Republican districts that delivered our majority and trifecta,” she continued. “We have members representing blue states with high taxes that are subsidizing many red districts across the country.”
Read Also: What the ‘Big, Beautiful Bill’ Means for Your Social Security Taxes
Reps. Andrew Garbarino of New York and Young Kim of California, who are Republican co-chairs of the SALT Caucus, also cautioned that the leaked text is “putting the entire bill at risk.”
“We have been crystal clear that the SALT deal we negotiated in good faith with the Speaker and the White House must remain in the final bill,” they stated. “The Senate should work with us.”
Leadership in the lower house cannot afford SALT-related defections, as the GOP majority in the House is only 220 to 212. If everyone is present, House leadership can only afford three defections at most.
Fiscal hawks, meantime, have made it difficult for the One Big Beautiful Bill Act to pass the Senate by demanding that the megabill have less of an effect on the deficit.
The Congressional Budget Office estimates that the megabill will raise the deficit by $3 trillion over the next ten years. Republicans in the Senate are also eager to look at ways to make some of the package’s short-term company tax cuts permanent.
In 2017, as part of the Tax Cuts and Jobs Act, Republicans placed a $10,000 maximum on SALT, which caused blue state legislatures to take notice. The purpose of the cap was to assist in funding other bill provisions.
