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Photo: Yuri Gripas/Abaca/Bloomberg via Getty Images

Blue-state lawmakers are pressuring President Biden to cut some taxes — while he raises others — in the horse-trading for his next big package.

Why it matters: The cold math suggests Biden will be forced to sacrifice the size of his infrastructure ambitions or embrace even more deficit spending — and convince Congress to go along.

Driving the news: Democrats, including Senate Majority Leader Chuck Schumer (D-N.Y.), are pressing the White House to repeal the $10,000 limit for deducting state and local taxes — the so-called SALT cap — from their federal tax bill.

  • Removing the limit — imposed by President Trump's 2017 tax reforms — would cost about $357 billion over the next five years, according to an analysis from the Joint Committee on Taxation for Rep. Tom Suozzi, who wants to eliminate the limit.
  • Repealing the cap is deeply unpopular with progressives, who argue doing so would favor the rich.
  • But many voters in high-tax (and Democratic) states — like New York, New Jersey, Connecticut, Maryland and California — hate the limit. The provision is scheduled to expire in 2026.

The big picture: The White House has been reluctant to put a price tag on its infrastructure plans, but Democrats close to the administration say it will likely be $1 trillion to $2 trillion.

  • Some Democrats, including Sen. Joe Manchin (D-W.Va.), are demanding the president find new revenue to pay for at least part of the package.
  • Biden himself has never been crystal clear about what new spending needed to be offset with new taxes, and gave himself an out during the 2020 campaign by maintaining "one-time" spending didn't require tax increases.
  • He never defined what that means and essentially stopped talking about it after he secured the nomination.
  • He also didn’t include it in any of his “Build Back Better” tax and infrastructure proposal.

Go deeper: During the campaign, Biden proposed policies that would raise about $3 trillion in new revenue, according to the Penn Wharton Budget Model.

  • But Democrats close to the White House think new revenue will probably be a total of less than $1 trillion, with the easiest changes on the corporate, capital gains and personal side.

By the numbers: Manchin told Axios he would support the corporate tax rate increasing from 21% to 25%, which could yield $400 billion to $500 billion in new revenue over 10 years.

  • Returning the top personal rate to the pre-Trump 39.6% would bring in another $153 billion.
  • Taxing capital gains as ordinary income — which would eliminate the so-called “carried interest” loophole for private equity — adds another $178 billion.

The bottom line: The amount of new revenue Biden could raise night not exceed the amount of lost revenue from a full repeal of the SALT cap.

Editor's note: This story has been updated to include new figures for the cost of repealing the SALT cap over five years.

Go deeper

Updated 21 mins ago - Politics & Policy

Omicron dashboard

Illustration: Shoshana Gordon/Axios

  1. Health: Fauci: "Confident" Omicron cases will peak in February.
  2. Vaccines: The shifting definition of fully vaccinated.
  3. Politics: New York Supreme Court strikes down Gov. Hochul's mask mandate for public areas — Sarah Palin tests positive for COVID, delaying defamation trial — Virginia school boards sue Gov. Youngkin for lifting mask mandate.
  4. World: U.K. to lift travel testing requirement for fully vaccinated — Beijing Olympic Committee lowers testing threshold ahead of Games.
  5. Variant tracker

Mike Pompeo shells out for media makeover

Via "Fox News Sunday"

Mike Pompeo's political action committee spent $30,000 on media training from last March to June — the most on any service beyond payroll during the first six months of 2021.

Why it matters: The former secretary of State hasn't just been losing weight but working to hone his media skills amid speculation about a possible presidential run, records show.

44 mins ago - Politics & Policy

Bipartisan infrastructure group takes on election reform

Illustration: Sarah Grillo/Axios

The bipartisan group focused on updating the Electoral Count Act of 1887 is seizing on this recess period to court senators more freely.

Why it matters: The group is led by Sen. Susan Collins (R-Maine) and includes many members who helped reach the bipartisan infrastructure deal. They see themselves as the only hope of creating an election reform package able to muster 60 votes in the Senate.

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