Rep. Malliotakis: This tax break would “cover almost everybody” on Staten Island

STATEN ISLAND, N.Y. — Relief for residents of high-tax states like New York could be on the horizon if some Republican members of Congress get their way.

Rep. Nicole Malliotakis, a Republican representing Staten Island and part of South Brooklyn, said Friday that a tripling of the State and Local Tax (SALT) deduction cap could provide significant relief for many of her constituents, but that negotiations remain ongoing.

“I can’t really give you those details, because it’s still being negotiated,” she said “But what I could say is if we can triple the deduction, it would cover almost everybody.”

Currently, the SALT deduction cap allows people who pay state and local taxes, like the residents of New York City, to take up to $10,000 off their federal taxes, a cap imposed by the 2017 Tax Cuts and Jobs Act passed during President Donald Trump’s first administration.

Since its implementation in 1913, taxpayers have been able to make varying deductions from their federal taxes based on what they pay in state and local taxes, but it had not been capped.

Should the 2017 tax cut bill be allowed to expire, the SALT deduction system would return to its former lack of cap, but it would also result in a variety of tax increases, particularly for much of the Republican base.

The party’s slim majority in the House of Representatives means that Republicans from high-tax states like New York, New Jersey and California have particular leverage to get an increase to the SALT deduction.

Malliotakis, in particular as a member of the House Ways and Means Committee, is poised to have a key role in negotiating any possible increases.

The congresswoman said the idea of tripling the deduction cap to around $30,000 would cover most taxpayers with incomes up to around $500,000. Staten Islanders have a median household income of about $98,000, according to the U.S. Census.

Though a possible relief for Malliotakis’ constituents, any increase to the SALT deduction cap won’t come without some sort of compromise on spending.

Rep. Chip Roy, a Texas Republican and member of the right-wing House Freedom Caucus, told the Hill that an expansion of the deduction would make it harder to pass the bill.

“Maybe it’s just because I don’t want to subsidize high-tax, blue-state jurisdictions,” he said.

Increasingly, it looks like those spending cuts will come from Medicaid programs, but Malliotakis said she’s working to ensure there’s as little impact as possible to the people who need the programs most.

Entitlement programs, like Medicaid, Medicare and Social Security, make up the largest chunk of the federal budget, but Malliotakis remains confident they’ll be able to find savings.

She said things like more work requirements for the able-bodied to receive Medicaid, and taking non-eligible recipients off Medicaid could help find the necessary savings.

“I‘ve made it clear that we are not touching Medicare and Social Security, and on the Medicaid side, there will be no cuts to the reimbursement...that New York receives from the federal government,” she said. “The abuse of the program (Medicaid), [removing] fraudsters who should not be on it because they’re not eligible, illegal immigrants, and then imposing work requirements on able bodied individuals with no children.”

Malliotakis said she expects negotiations to continue, and that taxpayers could expect to see a finalized plan sometime in July.