Pelosi backs removing deduction cap on state and local taxes

House Speaker Nancy Pelosi said on Thursday she supports and is “sympathetic” to a push by some Democrats to remove a controversial $10,000 federal cap on deducting state and local taxes, an issue in high-tax blue states such as New York and New Jersey.

Saying the limits were part of a GOP “tax scam” in 2017, Mrs. Pelosi said she is optimistic a repeal can be included in President Biden’s $2.25 trillion infrastructure proposal. 

“Hopefully we can get it into the bill,” she told reporters. 

Three House Democrats — Reps. Bill Pascrell and Josh Gottheimer of New Jersey, and Tom Suozzi of New York — have said that they would not support the tax hikes that Mr. Biden is proposing to pay for the infrastructure bill unless the cap on deductions is lifted. The president rolled out his infrastructure plan on Wednesday.

The issue is important for high-tax blue states. And while Mrs. Pelosi stopped short of saying she’d oppose the tax proposal without eliminating the so-called “SALT” cap, she said she supports the push to get rid of the limit.

The cap, created by a Republican Congress in the 2017 tax law, was “devastating for California,” she said, calling it “mean-spirited and politically targeted.”

Removing the cap, though, would mainly benefit wealthier taxpayers. The Tax Policy Center, a think tank, has projected that if the cap were repealed, more than half the benefits would flow to the top 1% of earners and more than 80% of the benefits would flow to the top 5% of earners.

Republicans scoffed at the price tag of the package, as well as the proposed tax increases the president is seeking to pay for his vision. Mrs. Pelosi, though, hailed Mr. Biden’s infrastructure proposal at her weekly press conference, likening it to the construction of the Erie Canal or creating the national park system.

“What the president did was in the tradition of America — to think big,” she said.

Mrs. Pelosi also pushed back at criticism of environmental initiatives in the infrastructure proposal, from replacing lead pipes to boosting the development of electric cars.

She dismissed the criticism from Republicans as coming from those “who don’t believe in science and don’t believe in governance and are people who are in the pockets of the fossil fuel industry.”

While withholding judgment, Mrs. Pelosi also said that if Rep. Matt Gaetz is found to have been involved in trafficking a minor, removing the Florida Republican from the House Judiciary Committee is “the least that can be done.”

But she said it will be up to the results of a Justice Department sex-crime investigation, and what the House Ethics Committee decides to do.

Mr. Gaetz has denied the allegations and instead said the probe involves a $25 million extortion attempt by former DOJ official David McGee to make the allegations go away. Mr. McGee, in turn, has said that allegation is “completely false.”