MacArthur Touts Tax Reform; Will It Help NJ As Much As He Says?

As homeowners around Ocean County and New Jersey headed to their municipal tax collectors' offices to prepay their 2018 property tax bills, House Rep. Tom MacArthur continued to press his message that the tax reform law is good for New Jersey.

MacArthur, in an opinion column you can read by clicking here, wrote the Tax Cuts and Jobs Act "is a win for New Jersey," and cited a study by the Institute on Taxation and Economic Policy as supporting his contention the law will help the majority of New Jersey residents. MacArthur, a Republican, is the only member of New Jersey's congressional delegation to vote in favor of the bill, which was passed in the early hours of Dec. 19 and signed into law by President Donald Trump last week.

It's a law that's been panned in New Jersey not only by Gov. Elect-Phil Murphy -- whom MacArthur rips in the column, part of an ongoing war of words between the two -- but also by other Republicans, including Rep. Rodney Frelinghuysen.

"The people of New Jersey already carry an extremely heavy tax burden. They need and deserve tax cuts. Unfortunately, H.R. 1 caps the federal deduction for state and local taxes (SALT), which will lead to tax increases for far too many hardworking New Jersey families," Frelinghuysen's office said after the vote. "This legislation will also damage our state's housing market and business environment."

Rep. Frank LoBiondo, the Republican from Cape May and Atlantic counties who is retiring at the end of his term in 2018, panned it as well, saying he supports simplification but the removal and capping of deductions hurts New Jersey residents. Chris Smith, the Republican who represents the 4th District, also panned it on the basis that it eliminated the deduction for state and local taxes.

MacArthur -- whose column defending the law criticized Murphy, Democratic Sens. Cory Booker and Robert Menendez and ripped the media, a favorite tactic of all politicians these days -- said the study by the ITEP, which he called a liberal organization, shows the tax reform would result in New Jersey families and businesses saving nearly $9 billion in federal taxes in 2019 and that 81 percent of New Jerseyans would see a tax cut.

"Would you believe that ITEP found that the average taxpayer in N.J. would see a tax cut of more than $2,000?" MacArthur wrote. This implies that everyone who falls into that 81 percent is going to pay nearly $2,000 less in taxes.

If you look at the breakdown from ITEP, however, New Jersey taxpayers who make $142,390 or less -- which is 80 percent of New Jersey taxpayers -- would see a maximum reduction of $1,360 in their federal taxes, according to the study. Those making $79,890 or less -- 60 percent of New Jersey taxpayers -- would see a maximum cut of $970, according to the study.

Does it help? Every penny helps. But it's not life-changing relief for 81 percent of New Jersey taxpayers, which is the implication. According to ITEP, of roughly 3.4 million taxpayers who earn $142,390 or less, nearly 2.8 million will see a reduction; 324,470 of the taxpayers in that group will see an increase in their taxes.

Of the nearly $9 billion in cuts, more than $5.5 billion is aimed at businesses and corporations. Will those cuts trickle down to that 81 percent of New Jersey residents making $142,390 or less, in the form of investment in the state? Only time will tell.

MacArthur and his chief of staff, Frank Luna, criticized the ITEP study and its conclusion that New Jerseyans will be hurt in 2027 when certain provisions of the law for individual taxpayers "sunset," or expire, saying there's no guarantee that will happen. An analysis on the website MarketWatch, however, says making changes may not be as easy as MacArthur and other Republicans claim, and the tax increases that would result would be brutal.

"Congress in the past has been unable to pick the lock of constraints, such as the automatic spending cuts known as the sequester," the MarketWatch article said, and pointed to the expiration of the Children’s Health Insurance Program as a more recent example.

MacArthur and Luna, also have defended the cuts by pointing to bonuses handed out by OceanFirst Bank, AT&T, Comcast, Wells Fargo, Boeing, and Bank of America as evidence of companies investing in their employees. But a day after announcing bonuses, AT&T announced it will be laying off employees, the New York Post reported. The New York Post report said AT&T is laying off 700 workers and that the layoffs could be even more severe.

MacArthur has directed pointed criticism at Murphy and Democrats saying the problem New Jerseyans face is primarily the result of state and local taxes. But given how tightly New Jerseyans on both sides of the political aisle cling to home rule and how strongly they fight attempts to merge school districts and other services, it seems unlikely anything will change on that front for a while. Gov. Chris Christie for eight years pushed for mergers and shared services, and we see how much success he had in accomplishing that.

You can read the full ITEP breakdown below and decide for yourself. You also can directly download the spreadsheet by clicking here.

ITEP Data NJ GOP Tax Plan by Karen Wall on Scribd

Photo by Karen Wall, Patch staff