The congressional tax code overhaul temporarily cuts tax rates for individuals, nearly doubles the standard deduction and doubles the child tax credit. But it will sharply curtail tax breaks for many New Jersey residents. And, the Institute on Taxation and Economic Policy says more than one-quarter of the state’s taxpayers, 26 percent, would effectively get a tax increase. Every member of the state’s congressional delegation voted against the measure, but one. Rep. Tom MacArthur joins Michael Hill.
Hill: Congressman, thank you for joining us. Please tell us how does this tax bill that was passed this week, how does this benefit the people in your district and the people of America?
MacArthur: Well, that’s a great question, Michael, and hello to everyone there. This benefits the nation because it’s the first real tax reform in 31 years. It gives the American people a real break in their taxes. It helps American companies be competitive and I think it’s going to help us grow our economy in a way that we just haven’t had in the last decade. We need growth, we need jobs and this will help. And, the story is much the same in my district. We benefit in South Jersey in a number of ways. First, the vast majority of my constituents will get a tax break. I run models, I’ve looked at every tax break and this is really good for the people of South Jersey. There were things specifically that I fought for to get me to a yes. One was getting back deductibility of property taxes, which was not in the initial bill. We got that restored at $10,000. The average property tax in my district is about $6,300. We got medical deductibility back which is a big deal to me. We have a lot of seniors. We have about 140,000 seniors in my district, many of whom have the higher than average medical expenses and we got that back in the bill. And then there were a whole bunch of things for people in education, whether it’s teachers who spend money in their classrooms. We allowed the deductibility of that, or student debt or people on scholarships who are going to get taxed for that, and we were able to get that out. So, I am really pleased with the final bill. It’s going to help our economy grow, it’s going to create jobs, it’ll help families have more of their own money, it’ll help businesses grow and I also think this is going to be really good for us.
Hill: Congressman, you mentioned the $10,000 cap for SALT deductibility. There are some people that say it’s going to hurt housing evaluations and properties here in New Jersey, in California and in New York and other high price, high taxed states. How do you respond to that criticism? The $10,000 cap is not what a lot of homeowners in places like Bergen County, Hunterdon County, Monmouth County, doesn’t seem to be in their favor.
MacArthur: Well, I don’t know that I agree with that. I’ve seen estimates going in both directions, but I look at it this way. If property taxes are driving up home values in our state, the answer isn’t to raise taxes more, that’s just going to drive prices up higher and make our state more unaffordable. If we bring taxes down, if the state brings taxes down, and we make our state more affordable to young people who want to buy a home and are fleeing the state today, or old people who can’t afford to stay anymore because property taxes are so high, we need to do something about that. And businesses, who don’t want to settle in New Jersey because we have a terrible regulatory environment and we’re too expensive. I think it can only help if we make our state more affordable. We’re doing our part in Washington, we’re bringing down taxes. I’m proud of the bill. It’s time now for the state to also bring down taxes and be competitive. There’s no reason for New Jersey to be the highest taxed state in the nation. There’s no reason for that. Why should Jersey residents pay the highest property taxes in the country? It makes no sense.
Hill: How does it help in terms of deductions for folks here in New Jersey overall?
MacArthur: Well, you have to look at all of it. You have to look at the deductions that we were able to restore, and that’s most of the big ones. Property taxes, health care costs, education costs, those are all back in the bill. Then you have to look at the rates that are coming down. Every one of the seven tax brackets is coming down. You have to look at the doubling of the standard deduction. Sixty percent of the people in New Jersey take the standard deduction. Right out of the gate, Michael, they’re getting double that deduction. That’s a meaningful tax relief for all of them.
Hill: Congressman, does it do enough though to benefit the people of New Jersey? Does it do enough in terms of benefiting the folks here?
MacArthur: Michael, it does and here’s the funny thing. I’ve heard a lot of people crying like it’s the end of the world apocalypse. Math doesn’t lie and facts matter. The people of New Jersey are going to see, the vast majority of them, a tax decrease. Lower taxes. They are going to see that in their paycheck come February. They are going to see that when they file their 2018 taxes that they are paying less than they use to, unless the state decides to tax them more, and then they’ll of course see more tax on the state side. But this is going to be good for the people of New Jersey. Now, don’t get me wrong, it would be better for our people if we had lower property taxes and a lower income tax, no question about it. The states that have lower taxes make out even better on this bill and if New Jersey can get to that place, then our people would get the full benefit of this federal tax cut. But, it’s still going to be good for the people in New Jersey.
Hill: Finally, congressman, you were the lone congressman in New Jersey who voted for this tax bill. Even before this vote there were plenty of people who were saying that your district, your position in Congress, is one of the vulnerable ones in New Jersey. Does this make you more vulnerable come next year?
MacArthur: Michael, I have no idea. I just know this: I don’t work out my time as a Congressman worrying about polls and politics. I listen to people, I do my work, I make sure that what I really vote on is what I believe. And I believe this is going to help our state and our country be more competitive and that’s all that I can do. I believe that in time, actually it’s not going to take as much time, the good people of South Jersey are going to see that after all the partisan, fear-mongering and misinformation that this bill is actually good for them. And so, that’s all that I can rest on, and I believe in what I voted on. I can’t answer on why people saw it differently, but I did the work. I did the modeling. I didn’t leave and just declare myself a ‘no’ vote when the bill came out and I didn’t like it and I did vote ‘no’ on the first version. But, I went to work, I got a $10,000 restoration of property taxes. I worked with other people to get medical back, to get education costs back and it’s a good bill. I’m proud that I was able to make improvements to it and because of those improvements I’m happy to support it.
Hill: Congressman, no Democrats in the house supported this bill. Is this any way to make laws for the entire nation?
MacArthur: No. It’s really not and I really fault both parties for this. If I have one hope, Michael, going into the new year, it’s that both parties learn to work together in a new way to do things that can really stand the test of time. Things that don’t have to get undone by the next administration, and I fault both parties for this. I went through this on health care when our party sort of left the Democrats out and voted ‘no’ on the first version of that, too, because there were no Democrats involved. So Republicans bear some responsibility, so did Democrats in the House. Democrats had been just in a resist mode all year. They’re voting ‘no’ even on good things. Today, for example, we vote to fund the government and as we did two weeks ago, most Democrats are going to vote ‘no’ and that includes funding for CHIP, funding for military, funding for critical priorities. Why are Democrats voting ‘no’? Because they want some things on DACA that we haven’t got to yet. You can’t hold up the entire government when you don’t get every last priority of yours. So, I would call them both parties that come together stop resisting, stop excluding, let’s work together and solve problems. I will work with anybody to solve these problems, including what to do about DACA, about the young people that were brought here illegally, including what to do about cost sharing reductions in health care. I will work with anybody, Republican, Democrat, independent, to solve these problems.
Hill: Congressman how much pressure did you feel and your colleagues feel to get something like the tax bill done giving this would’ve been the first major legislative achievement for this new president?
MacArthur: I don’t really look at it that through that lens at all, Michael. I felt pressed to get the bill right and to make sure that we deliver what we promised, but to do it in a way that actually helped people. And so, I’m not keeping score the way some do on concerns whether it’s this president or our last president. Whether it’s a president from either party or a Congress of either party, I want to see that over time we’re getting things done that help the American people. Whether it’s in the first 90 days or our first year, to me, gets overblown quite a bit.
Hill: Congressman Tom MacArthur joining us from his office in Washington, D.C. Thank you, Congressman.
MacArthur: Thank you, Michael.