WebHeader_Grove.jpg
Play Live Radio
Next Up:
0:00
0:00
Available On Air Stations
Support NHPR with your tax-deductible year-end gift today!

Sen. Robert Menendez on the SALT deduction dividing Democrats

MICHEL MARTIN, HOST:

By now, you've probably heard about that monumental spending bill that just passed in the House of Representatives. After months of debate, lawmakers approved the so-called "Build Back Better" plan. It's a roughly $2 trillion bill that focuses on social programs and spending to address climate change. The legislation is a key part of President Biden's domestic agenda, and now it's headed for the Senate, where it will most certainly face opposition from Republicans.

But as this and other recent negotiations have demonstrated, Senate Democrats have their own disagreements. One of those is the amount of state and local taxes a person can deduct from their federal income taxes, so-called SALT taxes. We wanted to hear more about this as well as other possible areas of disagreement that might emerge in the Senate, so we've called Senator Bob Menendez. He is a Democrat from New Jersey, and he is with us now. Welcome, senator. Thank you so much for joining us.

BOB MENENDEZ: Good to be with you.

MARTIN: So before we look ahead, just what was your reaction when the "Build Back Better" plan finally passed in the House yesterday?

MENENDEZ: Well, I think it was an exciting moment. This is a law that will lower the cost for families in so many ways, from child care to get women back into the workforce who desire to but need a place to have their children safely taken care of and educated at the same time to lower prescription drug costs to making sure that we expand health care and giving tax cuts to middle-class and working families through the child tax credit. So it's an excellent piece of legislation that I think will dramatically improve the lives of everyday Americans, so I look forward to supporting it in the Senate.

MARTIN: So let's talk about this issue around the SALT taxes. The bill includes a provision that raises the amount of state and local taxes someone can deduct from their federal income tax from $10,000 to $80,000. Now, people may remember that this was capped in the tax bill that was passed during the Trump years. And Democrats at the time - many Democrats at the time - objected to this, saying it was basically a way to - and if I could use this blunt language - stick it to predominantly blue states that tax people heavily to pay for their programs. Now, this time around, it was a point of debate for House Democrats. Some supported it. Some didn't. What do you make of this compromise?

MENENDEZ: Well, you know, the House compromise, I think, is a good movement forward on the deductibility of state and local taxes. I have a different proposal in the Senate, one that I think deals with the concerns of some that people who are millionaires and billionaires can get a tax deduction for this purpose but still would - at the same time, ensure that doesn't happen but ensure that middle-class working families in states like New Jersey that are maker states, which means we send far more money to the federal Treasury that other states get to enjoy - that they will be able to have the deductibility.

MARTIN: So you've said, though, that a SALT deduction won't protect middle-class families. But states like California, New York and your home state of New Jersey do have high income tax rates. So what - so you support raising the cap but not as high as the current House bill would have it? What's your compromise, and why is it better?

MENENDEZ: Because, No. 1, it's revenue neutral, meaning it won't cost a penny to the federal Treasury. It will allow the full deductibility to middle-class working families, but it won't go to those making over a million dollars. And therefore, the issue of millionaires and billionaires getting this tax deduction is not an issue.

MARTIN: You know, as the bill stands now, the current proposal that's in the House bill, it would be tax cuts to high-income households, and this is already emerging as kind of a point of contention. Some might call it sort of an Achilles' heel. Some people are arguing, why is this in alignment with the Democratic messaging of raising taxes on the wealthy to try to limit tax increases on the middle class? And what's your response to that?

MENENDEZ: Well, first of all, my proposal isn't a tax cut for the wealthy because, in fact, millionaires and most billionaires will not be able to ultimately have that deductibility, which is why our proposal is better.

MARTIN: How do you assess the prospects for the bill? I mean, it's - a couple of your colleagues on the Democratic side have been very vocal about some of their concerns about the House bill. Do you - and, you know, a lot of our conversation in the past couple of months has been focused on child care and the child care tax credit. Do you feel confident about the prospects of the bill now?

MENENDEZ: I do feel confident that the legislation, largely as it is, will pass the Senate. There will be some changes. You know, what is the state and local property tax deduction? Is it the House version or a Senate version? Will we be able to keep in a robust paid family leave? But largely, the overwhelming essence of the proposed legislation, which would cut costs for middle-class working families, is going to pass the Senate.

MARTIN: And you feel you are committed to voting for the bill. I'm just wondering what this last couple of months have been like for you. I mean, as you've noted - I mean, as we've noticed, a couple of your colleagues have gotten - and how can I put this? - an outsized share of attention for their kind of vocal complaints about the bill, and I'm just wondering how that has sat with you.

MENENDEZ: The essence of good legislation is a compromise. It doesn't mean that I need everything or the other person gets everything, and that's the very essence of how most good laws are made. I've been doing this for 30 years. I've seen that it can't always be my way nor it will always be the other person's way.

MARTIN: Are you confident that the bill will pass before the end of the year?

MENENDEZ: I am confident the bill will pass before the end of the year. As I said, it may be a slightly different version than the House, but I believe the very essence of the bill will be passed before the end of the year.

MARTIN: That was Senator Bob Menendez. He's a Democrat from New Jersey. Senator Menendez, thank you so much for talking with us.

MENENDEZ: It was good to be with you. Thank you. Transcript provided by NPR, Copyright NPR.