Pass the S.A.L.T. — Congressmen Say Tax Deal Rips-off NJ
U.S. Senator Bob Menendez and fellow Democrats on Tuesday rolled out legislation to restore a federal deduction that was capped by President Donald Trump's tax cuts in 2017.
The measure also has support from the state's lone Republican congressman, Chris Smith, R-N.J. 4th.
SALT stands for state and local tax deduction, which allows taxpayers to deduct local tax payments on their federal tax returns.
Under the reforms signed by Trump in December 2017, taxpayers can deduct up to $10,000 only in state and local taxes. They must choose between property taxes and income or sales taxes.
The proposed legislation has the same acronym but for a different phrase: "Stop Attacking Local Taxpayers."
“The vast majority of those claiming the deduction are middle-class households, especially in New Jersey, and the deduction helps local governments raise revenue for needed projects. In my district alone, 37 percent of taxpayers claim the deduction, to the tune of nearly $19,000 on average. That’s not small change," U.S. Rep. Bill Pascrell Jr., D-N.J. 9th, said Tuesday during a news conference at an accounting firm in Saddle Brook with Menendez, and U.S. Rep. Andy Kim, D-N.J. 3rd.
The SALT deduction has traditionally been popular in New Jersey, where some 41 percent of taxpayers have typically claimed it on their federal returns, according to a prepared release from the Congressional delegates backing the 2019 Act.
According to a recent survey by the New Jersey Society of Certified Public Accountants, more than 63 percent of 300 accountants surveyed said their individual and family clients earning less than $200,000 will see their federal tax bill rise as a result of the SALT cap.
Nearly 70 percent said the SALT cap would "definitely or somewhat" influence their advice to clients on whether to leave New Jersey.
Other New Jersey supporters and co-sponsors are U.S. Sen. Cory Booker, D-N.J, and U.S. Reps. Bonnie Watson Coleman, D-N.J. 12th, Donald Norcross, D-N.J. 1st, Tom Malinowksi, D-N.J. 7th, and Donald Payne Jr., D-N.J. 10th.
New Jersey is among just six states (along with New York, California, Illinois, Texas, and Pennsylvania) that claimed more than half (51.6 percent) of the value of all SALT deductions nationwide, according to an Oct. 2018 blog by The Tax Foundation, an independent tax policy non-profit.
The deduction was capped as part of the Republican-led tax reform, which also included reduced individual rates and a higher standard deduction and child tax credit. A breakdown by Business Insider notes, "There are still seven federal income tax brackets, but at slightly lower rates and adjusted income ranges."