Hi — I wanted to share this article from today’s Star-Ledger article that highlights the big win we had here in the House yesterday — restoring the State and Local Tax Deduction (SALT), which will give real tax cuts to hardworking NJ families.
Here is a link and I pasted the story below. I'm always eager to hear your thoughts, and thanks again for everything. Happy Thanksgiving!
Yours,
Josh
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House just voted to restore your property tax break as part of $1.75T spending plan
By Jonathan D. Salant | Updated: Nov. 19, 2021, 6:30 p.m. | Published: Nov. 19, 2021, 9:56 a.m.
The U.S. House acted Friday to restore most of the federal deduction for state and local taxes curtailed by congressional Republicans four years ago, voting to increase the cap to $80,000 through 2030.
The higher limit for deducting the state and local taxes, known as SALT, was included in President Joe Biden’s 10-year, $1.75 trillion proposal, which passed 220-213, with every Republican, including Reps. Jeff Van Drew, R-2nd Dist., and Chris Smith, R-4th Dist., voting no. All 10 House Democrats from New Jersey backed the bill.
“Big tax cut for Jersey,” said Rep. Josh Gottheimer, D-5th Dist., who helped lead the fight to restore the deduction. “I’m over the moon but more importantly I know families back home are going to be over the moon.”
“If you’re against this bill in Jersey, you’re basically saying you’re against lower taxes,” he said.
That legislation, the third of three major spending bills responding to the coronavirus pandemic and the economic downturn it caused, would expand health coverage, lower prescription drug prices, reduce child care costs, provide preschool for 3- and 4-year-olds, extend for one year the expanded child tax credit for lower- and middle-class households with children, ban offshore drilling in the Atlantic Ocean, and take steps to combat climate change.
“It puts us on the path to build our economy back better than before by rebuilding the backbone of America: working people and the middle class,” Biden said after the vote.
Friday’s action came after progressives delayed a vote for months on a five-year, $1 trillion bipartisan infrastructure measure, which Biden signed into law on Monday. They did so to ensure that moderates would support this bill, which they did.
Biden did not include the state and local deduction in his original proposal, but White House press secretary Jen Psaki said Thursday that the president was “comfortable with it moving forward” and was told that the bill would not get through Congress without it.
“It’s a sustainable solution, in our view, that means those with lower incomes would be able to fully write off their state and local taxes,” Psaki said, “This is a part of compromise.”
Changes to the deduction still need Senate approval, and the final provision may look very different than the one that passed the House. U.S. Sen. Robert Menendez and Senate Budget Committee Chair Bernie Sanders, I-Vt., are working on a plan to remove the entire cap but impose an income limit of at least $400,000 for claiming the deduction.
After a gubernatorial election in which New Jersey’s high taxes were a major issue and Gov. Phil Murphy won a closer-than-expected race, New Jersey’s endangered House Democrats welcomed the vote restoring most of the state and local tax break.
One of them, Rep. Mikie Sherrill, said she ran on three issues: funding the Gateway Tunnel, restoring the tax deduction and lowering prescription drug costs.
Gateway was in the infrastructure bill. The other two were in the bill the House passed Friday. Biden also signed a $1.9 trillion coronavirus stimulus bill with direct payments of $1,400 to most Americans earlier this year, passed over unanimous Republican opposition.
“If people feel I’m delivering for them, if they feel that the priorities I have are the priorities they have, I think that will be very compelling,” said Sherrill, D-11th Dist.
The bills are popular with Americans. In a Quinnipiac University Poll released Wednesday, the infrastructure bill was supported by 57% to 37% and the bill that passed Friday was backed 58% to 38%.
The House tax provision would increase the deduction cap to $80,000 beginning this year through 2030. The limit would revert to $10,000 in 2031 before disappearing altogether. The extra revenue gained from continuing a cap after it would otherwise expire in 2026 under the Republican tax law would fund the higher deduction cap and lower the federal deficit.
“Given our cost of living and tax rates in New Jersey, if you’re a teacher married to a firefighter, a $10,000 cap hurts you badly,” said Rep. Tom Malinowski, D-7th Dist., who came up with the plan. “We’ve devised a solution that provides full deductibility for all those middle class folks without costing the federal budget anything over 10 years.”
Other than California, no state would fare better under the higher deduction cap than New Jersey, according to the progressive Institute for Taxation and Economic Policy. The average Garden State taxpayer would save $980, behind only California’s $1,070.
Congressional Republicans have criticized the SALT provision as a giveaway to the wealthy. “The penthouse gets an obscene $125,000 tax break – but the building janitor gets nothing,” said Rep. Kevin Brady of Texas, the top Republican on the House Ways and Means Committee.
An analysis from the Tax Policy Center found that while 70% of the benefits would go to those in the top 5% of taxpayers, almost half of those who would see their deductions increase, 47%, make less than $254,500. Even with the increased SALT deduction, the top 1% of taxpayers would see their taxes rise, the center said.
The Republicans’ 2017 tax cut gave 21% of the benefits to the richest 1% of taxpayers, according to the Tax Policy Center, and they have sought to repeal the tax paid only by estates of more than $11 million, none of them family farms or small businesses. Their tax law increased the federal deficit by an estimated $1.9 trillion over 10 years.
“The Republicans didn’t cap SALT in 2017 because they wanted to tax the rich, they capped SALT to pay for even bigger tax cuts for the superwealthy and corporations and to punish states like New Jersey where we pay a little more in taxes to support the best schools in the country,” said Malinowski, another of the endangered Democrats.
Republicans have acknowledged that they imposed a deduction cap to make it harder for New Jersey and other states to raise local taxes to provide services to their residents, a topic House Speaker Nancy Pelosi, D-Calif., addressed at a press conference just hours before the vote.
“This isn’t about who gets a tax cut, it’s about which states get the revenue that they need in order to meet the needs of the people,” Pelosi said at a press conference Thursday.
While Smith opposed the GOP tax cut and supported other efforts to restore the state and local deduction, he said he voted against this measure because of concerns about inflation and the bill’s cost
“We don’t have this money,” he said. “I wish there was a freestanding bill on SALT.”
He also said the legislation provided taxpayer funding for abortion. “Taxpayers should not be forced to subsidize or facilitate the killing of an unborn child,” he said.
Van Drew explained his vote this way: “We cannot allow for the federal government to insert their excessive government overreach into Americans’ lives, starting from the moment they are born, and infringing on the right to individual freedom.”
This latest spending bill would increase the federal deficit by $367 million over 10 years, but that figure could shrink or even disappear if the new Internal Revenue Service effort to get wealthy Americans to pay all the taxes they owe brings in more revenue than projected.