Congress may restore your property tax break in its $3.5 trillion spending bill, but any changes will be temporary, according to one of the lawmakers working on the issue.
Rep. Josh Gottheimer, D-5th Dist., said one proposal being discussed is to bring back the full tax deduction for state and local taxes, known as SALT, but just for a couple of years.
“We reinstate SALT for a couple years and have to go back for more reinstatement after it, I’m fine with that,” Gottheimer, co-chair of the bipartisan congressional caucus fighting to restore the full deduction, said Sunday on CNN’s “State of the Union.”
Lawmakers from New Jersey and other high-tax states, most of which send billions of dollars more to Washington than they receive in services, have insisted that the spending bill restore at least part of the deduction for state and local taxes that Republicans capped at $10,000 in their $1.9 trillion tax law.
U.S. Sen. Robert Menendez, a member of the tax-writing Senate Finance Committee, previously acknowledged that the spending bill might not fully restore the tax break.
“If I can’t get the full restitution, then I want to get as much as possible to give relief to New Jersey taxpayers as well as others across the country,” Menendez told NJ Advance Media last month.
While the budget resolution allowing Democrats to pass their spending bill under the process known as reconciliation includes funds for restoring part of the tax break, the House Ways and Means Committee left it out of the tax changes it drafted.
The provision could make into the bill when the House Rules Committee takes it up this week, or during negotiations with the Senate to draft the final legislation.
While several lawmakers from New Jersey and other high-tax states have threatened to oppose the spending bill unless it includes an increased state and local tax deduction, some progressive Democrats have taken the opposite tack because most of the benefits would go to the richest taxpayers.
At the same time, however, most of those would see lower taxes as a result of restoring the tax break would be middle-class homeowners. The Joint Committee on Taxation found 66% of those using the tax break in 2019 made less than $200,000, even though a full repeal would give 61% of the benefits to those earning more than $200,000.
“Where we live, here in Northern New Jersey, which is such a beautiful place, if law enforcement and a teacher living together, they make $200,000 a year, it’s a very expensive place to live,” Gotheimer said.
“So, when we reinstate SALT, that’s giving tax breaks for them, because the cost of living here is higher, right? And I just want to be clear about that, that these are folks who are struggling to get by. And reinstating SALT will bring down their taxes.”
Even if Congress does nothing, the tax law would end the cap after 2025 along with all of the tax breaks for lower- and middle-income Americans, while the corporate tax cuts remained permanent. By 2027, 83% of the benefits of the tax law would go to the top 1%, according to the Tax Policy Center.
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Jonathan D. Salant may be reached at jsalant@njadvancemedia.com. Follow him at @JDSalant.
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Congress may restore your property tax break, but just for a little while, N.J. congressman says - NJ.com
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