Urges Congress to reinstate unlimited state and local tax deduction.
The bill notes that New Jersey is considered a 'donor state,' meaning its residents pay more in federal taxes than the state receives in federal funding. In 2018, New Jersey received only 79 cents back for every dollar paid in federal taxes, making it the state with the least amount of federal funding relative to its tax contributions. By advocating for the reinstatement of the SALT deduction without limitations, the resolution aims to address not only the financial burden on taxpayers but also the inequity in federal tax policies that affect New Jersey more severely than many other states.
Assembly Resolution No. 55 urges the United States Congress to reinstate the unlimited state and local tax (SALT) deduction, which has been a significant financial relief for American taxpayers for over a century. This resolution highlights the importance of the SALT deduction for residents of New Jersey, where taxpayers can deduct state and local taxes from their federal tax liability. The bill points out a dire tax situation for New Jersey residents following changes made by the Tax Cuts and Jobs Act in 2017, which capped the SALT deduction at $10,000. This change has disproportionately affected New Jersey taxpayers who had been deducting much higher amounts, with an average deduction of approximately $19,089 in 2017.
Supporters of reinstating the SALT deduction argue that the measure would provide substantial relief to New Jersey taxpayers, many of whom depend on the deduction to offset high state and local taxes. However, opponents of expansive tax deductions may express concerns about the implications of such measures on federal revenue and fiscal policy. Continued advocacy for the SALT deduction may see pushback, particularly in a divided Congress, as debates on tax policies often invoke strong opinions regarding wealth redistribution and local vs. federal authority in tax matters.