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Legislators in favor of lifting the SALT deduction cap include Reps. Tom Suozzi (D-NY), Mikie Sherrill (D-NJ), and Josh Gottheimer (D-NJ) — all of whom represent districts with lots of high-earning individuals paying high taxes. But high-profile progressives, like Rep. Katie Porter (D-CA), are also in favor — in fact, Porter, whose district in California had a median household income of $115,427 and median property value of $794,400 in 2019, has been a driving force behind raising the SALT cap.

In September, Porter defended her position on the Pod Save America podcast, arguing that keeping the current SALT cap or eliminating the deduction altogether would mean taxpayers would essentially be double-paying some taxes.

“No American with the same income level, the same earning power, the same salary, should owe more federal taxes just because of where they live,” Porter said.

The SALT deduction described above is the version currently in place in the most recent House version of the Build Back Better Act — but it’s not the only plan. Sens. Bernie Sanders (I-VT) and Bob Menendez (D-NJ) have proposed an alternate plan — one which would keep the $10,000 cap in place, but only for taxpayers making more than about $400,000 to $550,000, depending on estimates from the nonpartisan Joint Committee on Taxation. For taxpayers who make less than that, there would be no SALT cap.

Senate Majority Leader Chuck Schumer has proposed his own idea, which would completely do away with the SALT cap for the next five years and shift back to the $10,000 cap in 2026.

When did the SALT deduction change?

The SALT deduction been a part of tax policy since before the federal income tax was created in 1913, and apart from some minor changes in the 1960s and 1970s, it hadn’t changed significantly until the 2017 overhaul through the TCJA.

Whereas the 1964 and 1978 changes to the law addressed what could be deducted, the TCJA addressed how much could be deducted.

Taken on its own, the 2017 cap — which was set to expire in 2025 — looks like progressive tax policy. But it was enacted by a Republican Congress to make up for a revenue shortfall caused by cutting the marginal tax rate for the highest earners from 39.6 percent to 37 percent and corporate tax rates from 35 percent to 21 percent — hence the “tax cuts” part of the bill. Overall, according to the Tax Policy Center, the Congressional Budget Office predicted at the time that the Republican tax bill would increase the federal deficit by almost $1.9 trillion over its first decade.

Will the SALT changes actually become law?

The proposed SALT changes — either the current House version or the alternate Senate plans — are by no means a sure thing yet. As part of the BBB, an increase to the current SALT cap still has a long road ahead.

Specifically, as Vox’s Li Zhou explained Friday, the reconciliation bill still needs to pass the House — which at this point likely won’t happen until mid-November at the earliest — before moving to the Senate and then back to the House for (potential) final passage. In both chambers, unified Democratic support is crucial — with a 50-seat Senate majority decided by Vice President Kamala Harris in her role as president of the Senate, the party has no margin for error in one chamber, and only a few votes to spare in the closely divided House.

SALT, however, could help with that. Lifting the current SALT cap has been a key priority for Gottheimer, who leads the small group of moderate House Democrats who have thus far resisted voting for BBB without a Congressional Budget Office score, and the inclusion of SALT changes in the House bill could prove important in shoring up his support for reconciliation.

“We’re confident that with this [SALT relief] agreement, we can move forward on this crucially important package and we will continue working to ensure that this tax cut gets signed into law to deliver this relief to our constituents as soon as possible,” Gottheimer said in a Friday statement with Sherrill and Suozzi.

President Joe Biden speaks with Secretary of State Antony Blinken during the G-20 leaders’ summit in Rome, on October 31.

If leverage is the goal, then the big question ahead of any new talks is what, exactly, Iran might want. “There’s an assumption that this [Raisi] administration is going to take a maximalist approach to the negotiations,” said Esfandyar Batmanghelidj, visiting fellow at the European Council on Foreign Relations (ECFR).

That “maximalist” approach is a bit of a nice way of saying Tehran could make a demand that is a nonstarter for the United States, something like pushing for more sanctions relief beyond that involving its nuclear program, or by calling for the US to offer economic support or a sanctions reprieve first.

Iran will likely argue that the United States is the one that blew the deal up, and Tehran stayed in compliance for a year, so it’s up to the US to prove they’re acting in good faith. But that line is a bit tired now that Iran has definitely breached the agreement, too. “Both sides are now very far away from compliance with the deal. So it does make sense for both sides to incrementally take steps to return to the deal,” said Samuel Hickey, a research analyst at the Center for Arms Control and Non-Proliferation, a nonpartisan nonprofit dedicated to eliminating the threat of nuclear weapons.

Even if Iran doesn’t go full maximalist, exactly what sanctions relief will look like, and how it will work, will be a big part of making these negotiations work. Alex Vatanka, director of the Middle East Institute’s Iran program, said that in 2015, the sanctions relief the JCPOA promised didn’t fully deliver for Iran. “What they discovered in reality was that the threat of American penalty still loomed large and was hanging over their heads. On paper, they could trade with the world,” he said. “In reality companies, and many countries, still kept a distance from Iran.” Iran’s Supreme Leader Ayatollah Ali Khamenei has said the same: Iran wants sanctions relief not only on paper, but “in practice.”

 Michael Nagle/Bloomberg via Getty Images
Iranian President Ebrahim Raisi called for an end to US sanctions against Iran in a pre- recorded video at the United Nations General Assembly in New York, on September 21.

That first demand may be further complicated by a second: some sort of guarantee that this deal can withstand US domestic political shifts. Opposition to the Iran deal persists, especially among Republicans; as Sen. Ted Cruz recently tweeted of the Iran deal: “it is a 100% certainty that any future Republican president will tear it up.” This issue of US credibility is a real challenge, as it’s not something the US can easily deliver on, even if the Biden administration would like to do so. So the threat of American penalties still looms.

This also works in Iran’s favor, as it can use it as a cudgel in any talks. As Iran’s foreign ministry spokesperson replied to Cruz’s tweet: “Onus is on @POTUS to convince int’l community—incl all JCPOA participants—that his signature means something.”

Seyed Hossein Mousavian, a former Iranian diplomat and Middle East security and nuclear policy specialist at Princeton University’s Program on Science and Global Security, said Iran could deliver by curtailing its nuclear program, but when it comes to assurances that the US won’t renege, “the US delegation cannot give any assurance.”

All of that is going to be difficult to overcome. Experts said the US and its European partners may have to offer speedy relief from sanctions, but also find a mechanism to reassure the rest of the world and financial institutions that it’s truly okay to do business with Iran. Vatanka said the “silver bullet” would be American buy-in, including by US businesses, which would be an important signal when it came to the “in practice” part.

Batmanghelidj, at ECFR, said Western governments got a “crash course” from the failures of JCPOA implementation and attempts to mitigate Trump’s unilateral sanctions. And that may, counterintuitively, help negotiations. (European countries tried to set up a workaround to Trump’s sanctions, but it didn’t really do much.) The US and other countries can be prepared for pitfalls they weren’t before, and potentially could come up with ways to try to make the sanctions relief more robust and more durable.

Still, there are no guarantees for what might happen in 2024. Some experts think it may still be in Iran’s interest to take even a temporary break from sanctions, and then use that time to prepare in case another Iran-deal skeptic ends up in the White House and sanctions are reimposed.

That may be in Iran’s interest, but Iran itself might not see it that way. “Iran is in the driver’s seat,’’ said Afshon Ostovar, an Iran expert at the Naval Postgraduate School. Iran doesn’t really seem all that interested in returning to the deal, or even in getting sanctions relief.

“They’ve found a way to skirt sanctions, at least to the extent that they can stay afloat and manage the crisis that sanctions imposed upon the country,” he said. Meanwhile, they haven’t had to sacrifice or compromise in any other way; strategically, or militarily, or in terms of foreign policy,” Ostovar said.

Iran has withstood the “maximum pressure” campaign, even if it has compounded the economic pain for Iran and its people. The country may try to see if it can stall a little bit longer, while continuing to advance its interests and regional ambitions, and the nuclear program that Europeans and the US still really want to scale back.

And if that’s the case, these November talks might not deliver that so-called “mutual compliance” with the JCPOA that the parties are saying they want.

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