There are not many issues that bring the New Jersey House delegation together. The fight to roll back the state and local tax (SALT) deduction is one that is uniting both Republicans and Democrats from the Garden State.
Reps. Bill Pascrell, Jr. and Josh Gottheimer are leading the full delegation in formally requesting Congressional leadership include the repeal of the SALT deduction cap in the next COVID-19 relief legislative package as well as pressing Treasury Secretary Janet Yellen to support full reinstatement of SALT in the Biden Administration’s pandemic relief negotiations with Congress.
“Repealing the odious SALT cap remains one of absolute top priorities in the 117th Congress,” said Pascrell. “The SALT cap was enacted solely by the Republicans in their pathetic 2017 tax scam bill and New Jersey has been paying the price ever since.”
Fight Against Moocher States
Gottheimer added “While our residents and state are hurting, it’s time we fought back against the Moocher States who don’t pay their share.”
The SALT—which dates back to 1913—was removed in the 2017 GOP-written tax bill that placed a $10,000 cap on the deduction nationwide. According to a recent report released by the Rockefeller Institute of Government, New Jersey is among the top states in the country that pays more into the federal government than it gets back.
Gottheimer made the argument that repealing the SALT cap would provide critical relief that New Jersey needs as the state continues to fight back against the COVID-19 crisis.
Tax Cut for New Jersey
“Ever since the ruby red moocher states whacked New Jersey with the 2017 Tax Hike Bill, I’ve been fighting to fully reinstate our SALT deduction, to finally cut taxes for North Jersey families, and help more of our residents to stay here in Jersey—especially now as we’re still grappling with the COVID-19 public health and economic crisis,” said Gottheimer at a press briefing in Paterson Jan. 27.
Two recent studies backed up the concerns about residents fleeing the state. A U-Haul 2020 Migration Trends report ranked New Jersey as the third highest in the country of net migration U-Haul trucks leaving last year, an indicator of families and businesses leaving the state.
This follows a United Van Lines’ 2020 National Movers Study that New Jersey ranked as the top state in the nation for outbound migration last year, a spot New Jersey has held for the prior three years.
Gottheimer placed the blame for this trend on the 2017 elimination of the SALT deduction.
“(Bill and I) predicted it would raise New Jersey taxes and drive people out of the state. Unfortunately it has done just that,” said Gottheimer. “(We want to) help more families lower taxes and stay in Jersey. Getting money into the wallets of New Jerseyans is what this is about.”
The congressman framed the argument for reinstating the deduction as key to keeping the economy strong in North Jersey and keep benefits flowing to those “crushed” by the pandemic.
“Fixing SALT will provide critical relief to middle class taxpayers as well as our state and local governments,” said Gottheimer. “Being squeezed like lemons and bled dry by this pandemic, state governments will face savage cuts to critical public services without help.”
Its an argument that resonated with Paterson Mayor André Sayegh, who stated cities like his have been set back by the capping of the SALT deduction.
Backers of the repeal noted the SALT deduction has historically strengthened state and local government functions, including public health programs, support for low-income residents, and emergency response services.
“This pandemic has taken a heavy financial toll on Paterson,” said Sayegh. “Our budget has been burdened. The SALT deduction has set us back.”
Letter to Yellen
Besides the full repeal, Gottheimer is pressuring the Biden Administration to reinstate the ability for taxpayers to make charitable donations to their towns to receive a tax credit on their local tax bills. In June 2019, the U.S. Treasury Department and the IRS finalized a rule placing a limit on these charitable deductions.
“It is imperative that we work together to get our tax policy right and cut taxes for hard-working Americans as we continue to fight this pandemic,” Gottheimer wrote in a letter to Secretary Yellen. “Given the level of need in this country, we should be trying to encourage charitable giving as much as possible to help those that need additional help.”
Last Congress, Gottheimer introduced a bipartisan House resolution fully repeal the Treasury Department’s ruling that prohibits states like New Jersey from allowing towns and municipalities to use charitable funds to offer real tax relief to their communities.
The congressman has hope with the House and Senate controlled by Democrats and the election of Joe Biden as President, the issue will be resolved to the liking of the Jersey delegation.
“We have been fighting for this for years,” said Gottheimer. “Now is our time to say to these moochers states that have been ripping us off that the gig is up. It is time to lower taxes (in New Jersey) and make sure we help our families.”