Retired Army Sergeant Amanda Koontz is worried. She paid more than $11,000 in property taxes on her home in Elizabeth this year, but she could deduct it from her federal income taxes.
“To just give taxes and not get any return, that is almost un-American, as far as I’m concerned,” she said.
Under the proposed Senate tax reform plan released Thursday, Koontz and other New Jersey residents who currently pay the highest property taxes in the nation would lose that deduction.
“The taxes are outrageous, and you’re not getting the services,” Koontz said, “so at least if we had a return on the property tax, at least we would get something back.”
If Raquell Murray loses the property tax deduction on her home in Newark, she said she’d probably have to leave the state.
“The taxes here are just skyrocketing. And to own any homes in New Jersey, the impact is just tremendous. It would be devastating,” Murray said.
U.S. Sen. Cory Booker says the Senate tax bill’s even worse than the version released a week prior by the House.
“This is a target on New Jersey,” said Booker. “We are the number one foreclosure state in the nation. We have people are barely holding onto their homes.”
Some of the differences in the plans are:
- The House reduces the number of tax brackets down to four. The Senate maintains seven.
- For newly purchased homes, the House would lower the cap on interest deductions for mortgages of up to half a million on new homes. The Senate version maintains it at mortgages worth up to $1 million.
- Concerning the so-called SALT, state and local taxes, deduction, the House version limits the deduction to property taxes only and caps that at $10,000. The Senate bill ends all SALT deductions.
“Remember people entered financial deals, 30-year mortgages, with the understanding of the deductions they could take and now you’re changing that deal. And we know in the State of New Jersey how many people are one paycheck away from bring in crisis, from being homeless,” Booker said.
“The House bill was already bad for New Jersey, right? One in four New Jerseyans are going to see a tax increase. With the Senate bill, it’s just going to be even worse,” said Sheila Reynertson of New Jersey Policy Perspective
Reynertson says eliminating all state and local tax deductions hits hardest in high-tax states like New Jersey, New York, California and Massachusetts. More than 41 percent of New Jersey residents take the SALT deductions — worth $32.2 billion a year, according to the Tax Foundation.
“Keep in mind the percentage of New Jersey households that take these deductions are not wealthy. About half of them make less than $100,000 a year,” she said. “We’re talking middle class.”
The president has demanded Republicans deliver a tax-cut bill by the end of the year, but Republicans in New York and New Jersey are being urged to resist any tax bill that tables the SALT deductions. Retirees are watching.
“We’re definitely considering relocating to the Charlotte area. We’re looking now as a matter of fact, trying to prepare,” Koontz.
Booker says the only place to block the bill is in the House, which is expected to vote on its version of the bill next week. The Senate will vote some time after Thanksgiving.