The Biden Administration notched a big win last when the president signed the Inflation Relief Act into law. Despite the name, The Inflation Reduction Act is a slimmed-down version of the Joe Biden's original Build Back Better bill.
The new law, which took effect on Aug. 16, doesn't have most of the social safety net provisions Biden wanted. It also, by some accounts, won't do much about inflation.
But it does contain some major climate change provisions, will eventually lower the price Medicare recipients pay for some prescription drugs, raise taxes on corporations, and allow the Internal Revenue Service to finally start making long-awaited upgrades to staff and equipment.
Dems finally unite: One of the more impressive things about the bill was the ability of Democratic leadership to corral members who had persistent issues with some of its provisions. The big names are, of course, Sens. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona.
But just as important were the Congressional members who had declared they wouldn't vote for any bill that did not repeal or at least modify the Tax Cuts and Jobs Act's $10,000 cap on the federal tax deduction for state and local taxes (SALT).
The group, the Bipartisan SALT Caucus, actually has per its name members from both sides of the aisle. They had vowed when tax talks began shortly after Biden took office that they would oppose any tax bill that didn't increase or remove the $10K limit.
However, the Democratic no-SALT members relented, though somewhat grudgingly in many cases, in order to get a major Biden bill on the books. They did so even though they might not get another chance to change the SALT limitation.
If Republicans retake either the House or Senate or both, the SALT law will remain unchallenged. Depending on the 2024 presidential election, it could even be extended beyond its 2025 expiration date.
Salty response to SALT-free bill: That tax and political prospect is why this weekend's Saturday Shout Out goes to the article by Kery Murakami, senior reporter for Route Fifty, on the SALT situation.
Murakami's piece, "Prospect of SALT Deduction Increase Gone—at Least for a Few Years," looks at why the SALT provision didn't make it into the inflation act, how state and local officials are taking the news, and the grudges that, at least for now, are being held by some SALT change supporters.
Let's just say Manchin, who was a key player in the Inflation Relief Act's creation, is not their favorite Capitol Hill colleague.
Second audible shout out: I also want to give a second Saturday Shout Out to the Journal of Accountancy (JoA) podcast that looks at the tax provisions in the new law.
However, host Neil Amato's discussion with Adam Schrom, a CPA and director of product management at Bloomberg Tax, also covers the absence of SALT changes.
You can listen to the JoA-CIMA (Chartered Institute of Management Accountant) podcast episode at this link, or you can use the player below.
If you prefer, you can read the JoA episode transcript.
You also might find these items of interest:
- Property tax proposals — one real, the other fake — under scrutiny
- Treasury, IRS issue initial guidance on new EV tax credits in inflation act
- Yellen directs IRS to use new inflation act money for high-earner tax audits