Above: Congressman Josh Gottheimer (NJ-5) demands the Internal Revenue Service and U.S. Department of Treasury reverse their decision to block towns from using charitable deduction funds to cut local property taxes. (L-R) Prominent Properties Sotheby’s International Realty Sales Associate Cathy Bossolina, Ridgewood Mayor Ramon Hache, Wyckoff Councilwoman and realtor Melissa Rubenstein, Congressman Josh Gottheimer.
Today, Congressman Josh Gottheimer (NJ-5) joined local real estate agents and elected officials from Ridgewood and Wyckoff to fight back against the Internal Revenue Service’s (IRS) attempt to raise taxes even more on New Jersey families. Under the IRS’ proposed new regulation, towns would be blocked from giving real tax cuts to their residents through the creation of charitable deduction funds, an attempt by political bureaucrats to stop North Jersey from providing tax relief after last year’s Tax Hike Bill.
“At the end of last year, the Tax Hike Bill took a two-by-four to the State of New Jersey, and the IRS’ attempt to raise taxes even more on New Jersey families exposes their cynical goal to continue delivering on their own political ends – sticking it to the Northeast,” said Congressman Josh Gottheimer (NJ-5). “We are fighting back against government bureaucrats trying to block New Jersey towns from lowering taxes for their residents through charitable deduction funds – which are already used in 33 states – because we can’t afford to raise taxes on anyone in New Jersey.”
“In North Jersey, we pay the highest property taxes in the country, and the capping of the State and Local Tax deduction is a huge burden on prospective buyers and current New Jersey homeowners, including seniors who want to stay in their homes,” said Randy Lyn Ketive, CEO/Broker Owner of Prominent Properties Sotheby’s International Realty. “We are grateful for the work that Congressman Gottheimer has done to lower taxes in New Jersey, and we hope that the IRS will allow towns to keep New Jersey affordable for all who want to call it home.”
“I support any measure that would alleviate the pain and unfairness of the elimination of the SALT deduction, which has been allowed for more than 100 years,” said New Milford Councilwoman Hedy Grant. “New Jersey has been particularly hard hit by the elimination of SALT deductions and something must be done to help our residents.”
Under this new bureaucratic regulation, the IRS would create an arbitrary threshold that allows the IRS and government bureaucrats to pick winners and losers without Congressional approval, even though funds already exist in 33 states across country, and some of the nation’s top tax law experts affirmed earlier this year that the funds have “correct and long-standing” foundation in federal tax law.
In a letter to IRS Commissioner Charles Rettig, Congressman Gottheimer demanded the IRS reverse course on the new IRS regulation and let New Jersey residents actually lower their taxes. The letter also warned of the rule’s devastating potential to encourage more people and businesses to flee New Jersey and leave every other resident of the state holding the bag.
The fight against this devastating regulation has drawn bipartisan opposition from across the country. Earlier this month, a group of Georgia Republicans also wrote to IRS Commissioner James Rettig, saying their use of charitable deduction funds to support local schools and hospitals were threatened by their change.
In January, Congressman Gottheimer announced his Tax Cut Plan to fight back against last year’s disastrous Tax Hike Bill, which targeted New Jersey by limiting the State and Local Tax (SALT) deduction.
Congressman Gottheimer’s Tax Cut Plan called on towns to create new charitable deduction funds to cut taxes for New Jersey residents so that they can continue to invest in everything its residents need – from police to schools to streets.
The full text of Congressman Gottheimer’s letter to Commissioner Rettig can be found HERE.
Video from today’s event can be found HERE.
Congressman Gottheimer’s remarks as prepared can be found below:
Good morning. Thank you to Mayor Ramon Hache and members of the Ridgewood Council for having us here today in Ridgewood. Thank you to Wyckoff Councilwoman and Realtor, Melissa Rubenstein for being here.
Good to be here this morning with my good friend, Cathy Bossolina, who is on the front lines of the real estate market here in Ridgewood and across North Jersey.
As someone who deals with property values and property taxes every day here in North Jersey, you are like many of us who know the true stakes of what we’re here to talk about today – the devastating impact that the recently passed Tax Hike Bill is having on New Jersey homeowners and taxpayers and our fight back against the IRS attempt to raise taxes even more on New Jersey families. It’s time for actual tax cuts for Jersey families, homeowners and businesses.
Here are a few quick facts: At the end of last year, the Tax Hike Bill took a two-by-four to the State of New Jersey, gutting the State and Local Tax Deduction, capping it out at $10,000, sharply limiting New Jersey’s property tax deductions, eliminating interest deductions for home equity lines, and imposing a massive Tax Hike on Jersey families and businesses.
The result has been seismic: gutting the SALT deduction amounts to a seven percent tax increase on many of the residents in my district. According to Moody’s, it’s going to slow growth and decrease property values in New Jersey by 10%.
Why? On average, this legislation sent our taxes up in northern New Jersey. According to recently released IRS data, all four counties that I represent – Bergen, Passaic, Sussex and Warren, pay an average state and local tax amount that exceeds the new $10,000 cap.
Here in Bergen County, the average taxpayer claimed $24,783 in State and Local Taxes – more than half of which is now subject to double taxation under the new law.
This gives just one more competitive advantage to Moocher States and will escalate the exodus of New Jersey businesses and families. And when businesses leave New Jersey, businesses like Mercedes and Hertz, they take thousands of jobs with them.
And what do they point to? Lousy roads and high taxes.
We experience some of the worst outmigration in the country – 67% – that means that net more people are leaving New Jersey than are coming into New Jersey. Ours is the worst in the country; and people are leaving because it’s too expensive to live here.
According to the USA Today Network analysis of IRS migration data, between 2014 and 2015, New Jersey lost a net 33,700 people. That’s $2.6 billion in taxable income.
The New Jersey Business and Industry Association estimates that New Jersey has lost $21 billion in adjusted gross income since 2004 just from people leaving the state. That’s 87,000 jobs, $13 billion in lost economic activity, and $4.6 billion in lost labor income.
That’s why the realtors will tell you that they are getting flooded with calls from people whose kids are off to college looking to sell their home and move to Florida. Or why more and more of our residents are spending six months and a day elsewhere.
And that’s why we can’t afford to raise taxes on anyone in New Jersey.
The Tax Hike Bill – concocted by leadership in states, largely red states, that get far more back in federal tax dollars than they pay in, what I call “Moocher States” – held up New Jersey and cracked us open to be America’s piggy bank.
Before the Tax Hike Bill, states like Mississippi was getting $4.38 for every dollar they send, compared to 33 cents that we send. We’ve been literally subsidizing other states – their roads, their bridges, their fire departments, all at the cost of helping our own. And all at the cost of our property taxes.
Yet, the Moochers weren’t satisfied — they went in for more.
They took, and took, and expected to keep taking from our wallets. They aren’t even hiding it anymore. Last December, on the day of the vote, a Moocher State congressman looked at me
and gleefully announced “Today is the day we get to stick it to the Northeast!”
That’s why if you live in Florida or North Carolina, you loved this tax bill. You got a great deal – and those of New Jersey paid for it. There’s a reason why every Democrat and Republican in the New Jersey congressional delegation voted against the Tax Hike except one.
It’s why the New Jersey Realtors came out against it.
And why Tom Bracken, the head of the New Jersey Chamber of Commerce, said that, “being against this Tax Reform Act, that’s about as pro-New Jersey as you’re going to get right now.”
It’s also why governors and leaders from other states, including the Governor of Texas, and right next door in Pennsylvania, are courting our businesses and residents, writing op-eds in our papers, and even buying ads.
Since my election to Congress, I’ve worked hard to claw those dollars back from Washington, to get a better return on investment, so we can lower our property taxes. By working closely with mayors and councils, from both parties, with schools, and first responders, we’ve been applying for more federal grants and surplus equipment programs. In the first year, we raised our return by 16% over recent years– and clawed back $290 per household from Washington and the Moocher States. That can lead to real tax relief at the local level, for the mayors and towns here.
I’ve also introduced a series of other measures to fight against the Tax Hike Bill and actually cut our taxes in New Jersey. Because as my grandfather always told me – you must complain with a solution.
First, Republican Congressman Leonard Lance and I introduced bipartisan legislation to reinstitute the SALT deduction.
I also voted to cut taxes with my votes on the Health Insurance tax, the Medical Device tax, and the Cadillac tax.
Second, I introduced Anti-Moocher legislation so that residents in states like ours, that pay more, get a tax credit to help even things out.
Third, this Spring I stood with North Jersey mayors to announce my Tax Cut Plan to provide real tax relief for New Jersey families and taxpayers by setting up charitable tax funds in our towns.
The plan helps eliminate the new federal tax increase – and actually cut our taxes in Jersey – by utilizing the same kind of deduction that’s already being used in 33 other states, including South Carolina, Georgia, and Alabama – red states – to save their taxpayers money.
We helped introduce the legislation in New Jersey, and thanks to the leadership of the Senate President and Assembly Speaker and Governor, it’s now law. The towns here today – Wyckoff, Ridgewood – are looking at how they can provide relief from the new SALT cap. It’s going to take a fight – and they’re here to join in.
Here’s how the Tax Cut Plan works: Towns continue to invest in everything its residents needed – from police to schools to streets – by setting up a town charitable general fund. For those who make charitable contributions to that new fund, the town can now give tax credits to their residents on their property tax bills of up to 90 percent of their property tax bill.
And when you make this charitable contribution and itemize your taxes – like more than half of the Fifth District does – you could take a deduction on your federal taxes, even if you fall under the AMT.
Under this plan, instead of paying more than $13,000 in property taxes, you could make a charitable contribution of the $13,000 to your town charitable fund, and if the town provided a tax credit for all or part of the contribution, their costs could be offset with a 90 percent tax credit.
Last month, Treasury and the IRS – who for decades now had allowed these charitable funds and given a thumbs up – decided to change their minds, and proposed a regulation that would eliminate this tax cut for families.
It’s disgusting how overtly political this new regulation by the IRS feels – a bureaucratic overreach to double down on the tax hikes slapped on New Jersey residents.
And knowing that more than 100 of these charitable programs already exist in 33 states, and that Congress had multiple opportunities in passing these Tax Hike Bills to specifically address these funds, it’s clear that the IRS’ proposed new restrictions are not authorized by Congress. This is just a cynical attempt by the IRS and the Treasury Department to deliver on their own political ends to “stick it to the Northeast.”
That’s why I wrote to IRS Commissioner Charles Rettig– to demand him to reverse course on this new IRS regulation and let New Jersey residents actually lower their taxes. I will release the letter this morning.
And I was hardly the only one to raise a red flag.
Just last week, colleagues of mine from Georgia – all Republicans – also wrote a letter to Commissioner Rettig and Treasury Secretary Mnuchin to rail against the fallout that this regulation would have on their state’s utilization of charitable deduction funds.
In their own words, “Our offices have heard from parents, educators, school officials, and rural hospital workers about how the recently proposed rule would put a number of Georgia’s tax credit programs…in a peculiar situation.”
When I first announced this Tax Cut Plan, I pointed to similar programs in states like Georgia that utilized charitable programs to point out how these programs were already being used across our country to benefit local schools, towns, and infrastructure investments. When I spoke to the prior Acting IRS Commissioner Kautter, he even told me they were in quite a pickle on this one. They are effectively struggling to keep the longstanding charitable programs that have existed in 33 states while going after our new programs in blue states.
Now, the IRS’ proposed regulation would create an arbitrary threshold to permit some programs to exist within the charitable deduction benefit, while others are denied – allowing the IRS and government bureaucrats to pick winners and losers without Congressional approval and therefore without the necessary oversight from the American voter.
I am proud to join with my colleagues from Georgia, and the town councils from North Jersey with us today, to ask the IRS to reverse course on this new bureaucratic regulation and tax increase and allow the 33 states that have charitable funds to continue to use them to provide tax relief for their citizens. I know that our state Attorney General and other states are also fighting back against the IRS.
I will continue to fight back and defend New Jersey from those who want to tie us down. I will continue to fight for lower taxes so more families can afford to live here in our beautiful, safe communities and raise their children here, in a state we love so much.
Thank you, God bless you, and may God continue to bless the United States of America.