WASHINGTON, DC — Today, Tuesday, March 23, 2021, U.S. Congressman Josh Gottheimer (NJ-5) testified before the House Ways and Means Committee to continue fighting for the reinstatement of one of the most important issues for New Jersey’s Fifth District: the State and Local Tax (SALT) deduction.
Gottheimer noted that the 2017 partisan Tax Hike Bill had a devastating impact on the Fifth District, which gutted the SALT deduction with a disastrous $10,000 cap, sharply limited New Jersey’s property and state income tax deductions, and imposed a massive tax hike on Jersey’s families and businesses. The SALT deduction dates back to 1913.
“Four years ago, a double taxation grenade was lobbed at New Jersey and other high-tax states by the Moocher States in the partisan 2017 Tax Hike Bill. The Red States made out like bandits and got a bunch of tax relief for themselves — and we in Jersey paid the price for it with federal tax hikes,” said Congressman Josh Gottheimer (NJ-5). “It’s clear that removing the SALT cap has broad bipartisan support. The House has already passed the SALT cap repeal three times, including as part of two previous COVID-19 relief packages in May and October of last year. It’s time for both sides to work together — Democrats and Republicans — to get this done. It’s just common sense. Working together, we can reinstate SALT, cut taxes, and give a tax break to our hardworking, middle-class families, helping more Jersey residents recover economically from this pandemic.”
Recently, Gottheimer helped lead the introduction of new bipartisan legislation — the SALT Deductibility Act — which now has more than 100 cosponsors, to allow taxpayers to fully deduct their state and local taxes on their federal income returns.
Gottheimer has also led a bipartisan initiative from the full New Jersey House delegation to formally request that Congressional leadership repeal the SALT deduction cap, and that Treasury Secretary Janet Yellen support full reinstatement of SALT in the Biden Administration’s negotiations with Congress.
Watch video of Gottheimer’s testimony HERE.
Gottheimer’s remarks as prepared for delivery are below:
Chairman Neal, Ranking Member Brady, and members of the Committee, thank you for holding this critical Member Day hearing on one of the most important issues to the Fifth District of New Jersey: reinstating the State and Local Tax Deduction, also known as SALT.
Four years ago, a double taxation grenade was lobbed at New Jersey and other high-tax states by the Moocher States in the partisan 2017 Tax Hike Bill. The Red States made out like bandits and got a bunch of tax relief for themselves — and we in Jersey paid the price for it with federal tax hikes.
In fact, the only way they footed the bill was to gut the State and Local Tax Deduction, capping it at $10,000 — whacking us with a massive tax hike on Jersey families and businesses. Not applying double taxation on the same income was established at the beginning of our nation’s modern federal tax system in 1913, and this foundational belief remained true for 104 years — until the 2017 Tax Hike Bill took more than $668 billion dollars out of the pockets of hardworking Americans in the SALT states to pay for tax cuts for the Moocher States.
Gutting SALT has had a real impact on districts like mine. All four counties I represent had an average SALT claim above the $10,000 cap. Before the new cap, in Warren County, the average deduction was $12,588. In Sussex County, the average taxpayer claimed $14,267. In Passaic County, the average deduction was $14,714. And finally, 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.
New Jersey is one of the best places in the world to raise a family, but it can be difficult for retirees to stay in New Jersey. According to the Tax Foundation, New Jersey residents pay the second-highest property taxes in the entire nation. Another study ranked New Jersey as the toughest state to retire in — that’s right, dead last.
Beyond higher taxes for way too many Jersey families, young workers and businesses are moving out. Business owners tell me that it’s getting harder every year to attract talent to the state. In fact, U-Haul reports that New Jersey is one of the states that lost the most residents last year. Census data supports this, showing New Jersey is also one of the few states in the nation that saw a population decline last year.
Higher taxes are stifling economic growth for our region and decreasing property values, which are already falling. According to Mark Zandi, the chief economist for Moody’s Analytics, the SALT cap has cost homeowners $1 trillion in U.S. home value nationwide. A recent Zillow study drew a similar conclusion — since the Tax Hike Bill, home values in low-SALT states are rising much faster than in states like mine.
As we all know, New Jersey was in the eye of the COVID storm last spring, and the necessary public health measures taken to help stop the spread of the virus have hurt small businesses in my state. Unfortunately, almost one-third of small businesses in New Jersey have closed permanently. The latest relief package is providing immediate help, but removing the SALT cap would be a textbook method to provide additional relief to communities ravaged by the pandemic.
That’s why I worked with my friend, Congressman Tom Suozzi, to introduce the SALT Deductibility Act — bipartisan legislation to restore the full State and Local Tax (SALT) deduction.
It’s clear: removing the SALT cap has broad bipartisan support. The House has already passed the SALT cap repeal three times, including as part of two previous COVID-19 relief packages in May and October of last year.
It’s time for both sides to work together — Democrats and Republicans — to get this done. It’s just common sense. Working together, we can reinstate SALT, cut taxes, and give a tax break to our hardworking, middle-class families, helping more Jersey residents recover economically from this pandemic.
Thank you for your leadership on the committee and for having me here today. I am grateful to be able to speak on this issue before you.