Donald Trump Plans To Ditch Big Tax Break That Saves PA Residents Thousands

It's official: President Trump wants to ditch that big federal income tax break you get every year.

As part of a much-awaited reform package, the Trump administration announced Wednesday that it plans to dump the federal property tax deduction for state and local taxes that saves Pennsylvanians, on average, $2,182 a year.

During a press conference on Wednesday, Treasury Secretary Steven Mnuchin said the Trump administration plans to eliminate all tax deductions other than mortgage interest and charitable deductions.

"We think that will be sweeping reform," he said during the press conference (see his comments below, beginning at 10:40).

Mnuchin and Gary Cohn, chief economic advisor to Trump and director of the National Economic Council, said the financial hit property owners would take would be offset by economic growth and an overall tax cut.

Few specifics were offered, but Trump's plan would cut the tax rate paid by businesses to 15 percent. The number of individual income tax brackets would be reduced from seven to three, which would likely lead to a tax cut for people across the board.

"Our basic premise here is to simplify the tax system and lower rates," Cohn said. "We don't want to penalize people. We want to make the system very fair."

But critics saw the plan as a giveaway to corporations and a tax cut that will likely benefit the rich, while removing a deduction that property owners have come to depend on.

A study from the Tax Policy Center says that ditching the property tax deduction for state and local taxes would cost New Jerseyans who take the exemption an extra $3,522, while Pennsylvania taxpayers would pay $2,182 more.

A new report by RealtyTrac shows the state continues to have the highest average property tax bill in the country. New Jersey homeowners paid the highest tax rate last year, at 2.31 percent, RealtyTrac says.

U.S. Rep. Bill Pascrell Jr., a Democrat from New Jersey, recently advanced a resolution urging that the federal property tax deduction "not be further restricted." He said House Republicans' push for tax reform shouldn't mean "using a sledge hammer to drive federal income tax rates as low as possible."

"While lowering rates is our goal, the reality is that hammer just might whack one of the few areas where many middle class homeowners get a break on their taxes," Pascrell said in a statement.

U.S. Sen. Bob Casey, a Democrat from Pennsylvania, said the tax reform package will do little to offset the hit his state will take, calling it a "massive tax giveaway to millionaires, billionaires and big corporations at the expense of middle class families in Pennsylvania"

"This tax plan may help the wealthiest and the biggest corporations avoid paying their fair share, but it won’t create jobs, increase middle class incomes or grow our economy," he said in a statement.

Pascrell said New Jersey property tax increases have consistently outpaced increases to median home values and incomes, adding that the average New Jersey homeowner has seen their property taxes increase by 66 percent since 2001

"The reality is that the majority of our property taxes fund schools and social services," he said. "With demand for services outpacing local incomes and employment, state and local governments will continue to lean on property taxes to meet expenses."

Photo: WH.gov, Gary Cohn and Steve Mnuchin