It’s been more than six months since the $1.5 trillion tax bill passed Congress, but the fight over the state and local tax deductions never really ended.
“Before the tax hike bill passed last December, we were able to deduct in New Jersey anything you paid in your property taxes or your state income tax. Before you ever had to pay your federal taxes, you would deduct those out, that way you would avoid getting taxed twice on the same income,” Rep. Josh Gottheimer said. “We’re of course now going to have to pay more in taxes, and those benefits are going to other states, not New Jersey.”
The tax bill is set to expire in 2025, but now there’s a push from President Trump and other congressional Republicans to make it permanent. House Ways and Means Committee Chairman Kevin Brady said the best way to continue to strengthen America’s economy is with America’s middle class families and our small businesses.
“One, so they can continue to grow. Two, so we can add a million and a half new jobs. And three, we can protect them against a future Washington trying to steal back those hard-earned dollars that you and the Republicans in Congress have given them,” Brady said.
Several states, including New Jersey, are suing the federal government to prevent it from enforcing the SALT deduction cap, claiming it violates the constitution.
“We have a huge issue right now in the state of New Jersey of affordability and competitiveness and this federal tax act, which is now being proposed as being permanent, is going to make us less affordable, less competitive and it’s just putting us in a very bad position,” said Tom Bracken, president of New Jersey Chamber of Commerce.
The governor’s press secretary said in a statement, “Governor Murphy is committed to fighting against the unjust and unconstitutional SALT deduction cap, which targets states that already send far more than their fair share of taxes to Washington.”
“Eight hundred billion dollars of benefits that went to other states, we paid for out of the blue states,” Gottheimer said.
The anticipated House vote on whether to make the tax bill permanent is set for September.
“I think there’s a good shot. From what I understand, it could get out of the House despite a lot of us opposing it. There’s a lot of races that are on the edge in the Senate. A lot of seats that are close, so we’ll see what they’re doing,” Gottheimer said.
It’s a decision, Gottheimer says, that puts blue states on the line.