Rep. Gottheimer Slams US Treasury For Blocking NJ's Tax Cut Plan

WYCKOFF, NJ — Congressman Josh Gottheimer slammed the U.S. Treasury for enacting new rules preventing New Jersey residents from avoiding a new cap on state and local tax (SALT) deductions.

The Treasury Department released new rules Thursday that could cause residents to see marked increases in their federal tax bills in 2019 because of the $10,000 SALT deductions cap. New Jersey is suing the federal government over the cap. The state is allowing local taxes more than $10,000, which cannot be deducted, to be turned into charitable donations.

New Jersey lawmakers say the plan would make permanent what's already unpopular in the 2017 law, particularly the elimination of personal exemptions to help pay for tax cuts that some estimate could cost more than $1 trillion.

"Without any congressional authorization whatsoever, the US Treasury Department just jacked up taxes today on millions of Americans," said Gottheimer (NJ-5th). "We will fight these shameless rules and will continue to fight for lower taxes for New Jersey families."

Under the current law, some cuts are permanent and some – including the $10,000 cap – expire after 2025.

Three important components of the 2017 law are expected end up costing New Jersey taxpayers more:

• The law eliminates deductions for state income or sales taxes.
• The law caps the deduction for property taxes at $10,000. This element is viewed as a compromise because original tax reform plans called for doing away with the deduction entirely.
• The law preserves the mortgage interest deduction only for existing mortgages of up to $1 million but cap future deductions for mortgages up to only $500,000.

"It’s clear that the IRS agrees with us that it cannot distinguish longstanding tax credit programs from the newer state tax charitable deduction programs," said Gottheimer, a first-term congressman. "What we cannot stand for, however, is this arbitrary and capricious and procedurally deficient turnabout in tax policy — deviating from the specific language and intent of still fresh tax legislation to serve its cynical political ends."

President Trump said he wants to further lower the corporate tax rate, from 21 percent to 20 percent, as part of a second round of tax cuts later this year, according to The Washington Post.

"Treasury’s arbitrary fiat will encourage more people and businesses to flee New Jersey and leave every other resident of our state holding the bag," Gottheimer said.

With reporting by Tom Davis

Email: daniel.hubbard@patch.com

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