Part of your property tax break would be restored under new U.S. Senate budget proposal

Posted Jun 23, 2021

A budget resolution to allow the Senate to pass a $6 trillion spending bill by a simple majority includes $120 billion to help restore the deduction for state and local taxes, according to a draft obtained by NJ Advance Media.

The proposal by Budget Committee Chair Bernie Sanders, I-Vt., would earmark the money over five years. That would not be enough to fully restore the tax break, which would cost $673 billion over 10 years, according to the Tax Foundation, a conservative research group.

Sanders has been on record as opposing a full restoration of the tax break, known as SALT, but his budget proposal shows a willingness to address the Republican tax law’s $10,000 deduction cap, which hits New Jersey hard because it has the nation’s highest property taxes.

President Joe Biden’s proposed $4 trillion spending proposal did not address the issue.

“It’s great that they’re finally recognizing how important SALT is,” said Rep. Josh Gottheimer, D-5th Dist., co-chair of the Congressional SALT Caucus.

Several Democrats have threatened to withhold their votes for a budget package unless action is taken on the cap, which disproportionately hurts New Jersey and other high-tax states, most of which send billions of dollars more to Washington than they receive in services.

“There can’t be any deal that doesn’t include SALT,” said Rep. Bill Pascrell Jr., D-9th Dist. “We are willing to discuss the specifics. None of us are made of stone. But substantial SALT relief must be a part of a deal, period.

Republicans and some progressive Democrats argued that the tax break primarily benefits the rich, but far more middle-class homeowners take advantage of it.

A study from the progressive Institute on Taxation and Economic Policy found that 80% of the 1.9 million New Jerseyans who would benefit from removing the cap had an average income of $216,000 or less, even though 72% of the benefits would go to the richest 5%.

“The SALT cap is a gut punch to middle-class families like mine,” said Patrice Mareschal, a professor of public policy and administration at Rutgers University-Camden and a single mother of two.

Gottheimer, Sherrill and other Democratic lawmakers joined union leaders outside the U.S. Capitol Wednesday to argue that the state and local deduction really was a middle class tax break.

“In my district, you don’t have to be a millionaire to be impacted by SALT,” said Rep. Mikie Sherrill, D-11th Dist. “Now is the time to keep making this case.”

The union officials said their members were paying the price for capping the deduction, both because localities find it harder to raise the money needed and because the union members themselves were paying more in taxes.

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published this page in News and Politics 2021-06-24 01:58:01 -0700