According to two sources familiar with his thoughts, Richard Neal, Chairman of the House Ways and Means Committee is asking Nancy Pelosi, House Speaker to discuss expanding the federal deduction for local and state taxes during a Wednesday afternoon meeting with President Joe Biden.

Biden would be able to engage in a discussion that is not his usual style: How do we address an important, but costly, tax cut that benefits mainly higher-income households?

The state and local tax, or SALT, write-off has divided Democrats over whether to expand a measure that’s a boost to homeowners in Democratic strongholds including California, New York and New Jersey, but also would eat into the revenue that Democrats have to spend on social programs.

Pelosi, Senate Majority Leader Chuck Schumer and the President will meet Wednesday to discuss how to move forward with a package that includes tax increases and social spending plans.

Along with the cost, SALT has emerged as one of the most controversial issues. Biden’s participation in the discussion about SALT may help to broker a settlement. Biden is not currently involved in the SALT discussions, as he has already omitted it out of his tax plans. White House officials stated that Congress must come up with an answer, as well as revenue-generating measures to cover the increased break’s cost.

Unsettled Issue

House Democrats failed to agree on a way to address SALT when they approved the bill in the House Ways and Means Committee last week, leaving the issue to House leaders to resolve. Neal promised to work with Pelosi to resolve the SALT cap.

A source familiar with the plan said that many discussions about SALT have been focused on the two-year elimination of the $10,000 limit — which will allow for unlimited tax breaks during this period. Lawmakers also discussed raising the threshold cap, which would be less expensive.

In their 2017 tax overhaul, Republicans included a $10,000 cap. This was to offset some corporate and income tax cuts.

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