House poised to restore your property tax deduction

Posted Dec 11, 2019

WASHINGTON — A move to give you back your full property tax deduction gained big momentum Wednesday in Congress.

But don’t celebrate quite yet.

A key House committee on Wednesday voted to temporarily restore the full federal deduction for state and local taxes, and Rep. Bill Pascrell Jr. said the full House will vote on the measure before going home for the year.

But Senate Republicans have rejected the idea of bringing back the full tax break that is of particular importance to New Jersey and other high-tax states that send billions of dollars more to Washington than they receive in services.

The House Ways and Means Committee on Wednesday passed the bill, co-sponsored by Pascrell, to double the tax deduction in the current year to $20,000 for married couples and remove the cap completely in 2020 and 2021.

It would be paid for by restoring the top tax rate to its former level of 39.6 percent from 37 percent under the Republican tax law.

“The tax scam law of 2017 remains one of the most destructive bills we’ve ever seen because it specifically went after the middle class,” said Pascrell, D-9th Dist. “The principal way it did this was by capping the state and local deduction.”

The measure passed along party lines except for Rep. Tom Reed, R-N.Y., who crossed over and voted with the Democratic majority.

Pascrell told NJ Advance Media that the House would get a chance to vote on the measure before the end of the year.

While GOP lawmakers claimed the deduction was a subsidy for high-tax states, New Jersey sent $21.3 billion more to Washington in 2017, second only to New York’s $35.6 billion, according to the State University of New York’s Rockefeller Institute of Government.

“My state is the biggest donor to the entire United States of America than any other state,” said Rep. Thomas Suozzi, D-N.Y. “It’s not fair that we’re huge net donors to the federal government and now you want to increase that amount even more.”

In New Jersey, the state and local tax deduction primarily benefitted middle-class homeowners. Internal Revenue Service statistics showed that 860,000 Jersey households making less than $200,000 had an average tax deduction of more than $10,000 before the cap.

While upper-income taxpayers would benefit more from lifting the cap than middle-class homeowners since their deductions are higher, they would give back much of those benefits due to the higher tax rate they would have to pay.

That didn’t stop Republicans on the committee from claiming that restoring the deduction was a giveaway to the wealthy..

“Democrats want to make our tax code more complicated and give local politicians a ‘thumbs up’ from Congress to brutally tax their citizens,” said Rep. Kevin Brady, R-Texas, the top Republican on the committee and the author of the GOP tax law. “Democrats are championing a bill that offers ‘tax cuts for the wealthy, tax increases for small business and families.’”

And while the economy has continued its upward climb that began under the administration of President Barack Obama, the Congressional Research Service said the tax law has had little impact on growth while increasing the federal deficit by an estimated $1.9 trillion over 10 years.

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