Gottheimer’s full remarks as prepared for delivery are below.
I’m here today in Ridgewood with our esteemed elected officials and my good friend, and a great leader, Tom Bracken, the President and CEO of the New Jersey Chamber of Commerce. We are all united not only in our fight to restore the State and Local Tax deduction, and give a real tax cut to our hard working families. But we do believe that, if we want to draw and keep jobs here, it is essential that we invest in New Jersey’s infrastructure and transportation.
And there’s a particular reason we are standing here — with this mound of SALT behind us — because anyone who lives in Jersey knows that when a winter storm is coming, we’ve got to salt the roads.
That’s why any infrastructure legislation we pass in Washington — that includes changes to the tax code affecting families — must include a reinstatement of the State and Local Tax deduction and a strong investment in our crumbling infrastructure and transportation. And, as outlined in a letter that I will be sending to the Treasury Secretary this week, we can pay for both by closing tax loopholes and going after all those tax cheats who don’t pay what they should.
Here are the facts about the tax storm that’s hit Jersey: since the 2017 Tax Hike Bill gutted SALT and put a $10,000 cap on the deduction nationwide. In each of the counties I represent, on average, taxes went up, not down. Middle class families in Sussex, Warren, Bergen, and Passaic Counties are now paying anywhere from $2,500 to $14,000 more in taxes. Here in Bergen County, for example, between property taxes and state income taxes, the average SALT deduction in 2017 was more than $24,000 dollars. Do the math, overnight, our families had to pay federal taxes on $14,000 more of their income that they didn’t have to pay the year before. That’s a sucker punch if I’ve seen one.
Before I voted “No” on that Tax Hike Bill in 2017, Tom Bracken and I stood near here and predicted that it would raise Jersey’s taxes and drive residents and jobs out of our state. This is one where I wish we hadn’t been right.
In a state where taxes were already too high, gutting SALT has had a real impact. People are moving out – in fact, according to United Van Lines, we are now the number one out-migration state in the country — three years running. People are heading to Florida, North Carolina, and Texas, where state income taxes are far lower or zero.
As Tom will tell you, businesses are leaving, not coming to, the state, and it’s incredibly hard to recruit workers because of the cost of living. Property values are also way down. According to Moody’s Analytics, the SALT cap has cost homeowners $1 trillion in U.S. home value nationwide. This massive decrease in home values has been disastrous for our nation’s middle class, because home equity represents 42% of a middle class household’s wealth.
In short, our middle class families and our state had their challenges before SALT, but this strapped a rocket accelerator to them all.
Just as a refresher, before 2017 — in fact, since 1913 — taxpayers were able to deduct what they paid in their local property or state taxes before paying their federal taxes — to avoid getting taxed twice on the same income.
But then the Moocher States struck: in 2017, when the red states needed to pay for tax cuts for their families, they decided to take a 2×4 to us –– and to take it out of our hide by gutting SALT. It was a direct hit on the blue states – our taxes went up, and our middle class and programs for harder-pressed, lower income families suffered.
Now, some will claim that the SALT deduction is just a benefit for the well-to-do. Well, not here in northern New Jersey. Our property taxes are second highest in the country. The average property tax bill in Bergen County is $15,000. Do the math, with a $10,000 cap, that taxes for our middle class families — including teachers, cops, nurses, and firefighters – went up. This isn’t Oklahoma, where the median property tax is around $1,200 — or Alabama, where the median property tax is just $580.
The cap on our SALT deduction also ends up hurting our state, as well as our ability to address key infrastructure needs, like our roads and bridges, our lead-ridden pipes, and all of the good programs and schools we provide, too. Because when higher-income families move out of the state to save on their taxes, we lose revenue, and it places even more of the tax burden on middle-and-lower income residents.
It’s clear: costs here are just too high. That’s why I’m fighting to help make life more affordable.
This is something I heard from all of my colleagues last week when we announced the new 32-member strong bipartisan SALT Caucus in Congress — which I’m co-chairing — who are focused on getting the real facts out there.
The fact is that when residents and businesses leave our state, they frequently cite New Jersey’s high taxes and the dilapidated infrastructure and transit systems as reasons why.
Overall, New Jersey has the third worst roads in the entire nation. A third of our bridges are considered structurally deficient or need repairs. Our public transit has had the worst on-time record and the Gateway Project – the train tunnel project between New York and New Jersey — has stalled for years. It’s killing productivity and commute times. Lead water continues to threaten our children’s drinking water in schools, and many rural New Jersey residents — like in parts of my District — do not have basic broadband connectivity.
You can’t run a 21st Century economy when you have the 13th worst infrastructure in the world. If we want to draw the best jobs, and keep our families here, we’ve got to fix it.
We need significant investment and we must pass an infrastructure and transportation bill. This is something Democrats and Republicans agree and as former Treasury Secretary Larry Summers has outlined. And we need to reinstate SALT. Along with public private partnerships, an infrastructure bank, and closing loopholes that allow large global companies from skipping out on paying any taxes here, here’s one way to pay for it:
Right now, according to the IRS Commissioner, every year, there’s $1 trillion dollars in taxes owed that are not paid to the federal government — what we call the “Tax Gap” — which has surged over the past decade. Tax cheats — both people and large global conglomerates — are able to get away with this by abusing tax loopholes or utilizing foreign tax havens in places like Bermuda and Luxembourg to shift profits overseas, or by hiding their income using new technology such as cryptocurrencies.
This leaves our community’s middle-class families and our small businesses here in Jersey — the same people most invested in the future of our communities — holding the bag and picking up the slack.
We need the Administration to support increased investment for the IRS to enforce our current tax laws and help close this massive tax gap.
It isn’t right, it’s clearly holding us back, and — by addressing these issues and helping fill the tax gap — it could help us invest in the infrastructure improvements our nation and New Jersey desperately need – and reinstate SALT. It’s a point that I will be making to the Treasury Secretary this week–– strongly recommending we close the tax gap to help pay for SALT and infrastructure. It’s also why I’ve co-sponsored legislation to help close the tax gap.
As we continue our negotiations in Congress and with the Administration, and as we continue to work together in the Problem Solvers Caucus, I’m focused on finding a bipartisan path forward. That’s why I was at the White House last week and we will continue sitting down this week –– Democrats and Republicans –– to get legislation passed and signed into law. Let’s reinstate SALT and fix our infrastructure, and we can do that by filling the tax gap and getting the federal investment we need.
But if there are changes to the tax code that impact our families without reinstating SALT, my view is simple: No SALT? No Dice.
We must get this done. We simply have no other choice.
Thanks again to the Mayor and to the New Jersey Chamber of Commerce for standing with me in this fight.
Working together, here in the greatest country in the world, I know our best days will always be ahead of us.
May God bless you and your families, and may God continue to bless the United States of America.