Urges Congress to reinstate unlimited state and local tax deduction.
SR22 posits that the cap on the SALT deduction disproportionately affects New Jersey residents, who, due to their high taxation rates, rely heavily on this deduction to alleviate their federal tax burdens. As a 'donor state', New Jersey residents contribute more in federal taxes than what the state receives in federal funding; in fact, the state received only 79 cents for every dollar paid in federal taxes in 2018.
Senate Resolution No. 22 (SR22) urges the United States Congress to reinstate the unlimited state and local tax (SALT) deduction. This deduction has historically allowed taxpayers to offset federal income taxes with state and local taxes paid, including real estate and personal property taxes, as well as state income or sales taxes for over a century. The bill emphasizes the significant financial implications of this deduction for residents of New Jersey, where more than 41% of federal taxpayers claimed the SALT deduction in 2014. The resolution highlights the average SALT deduction taken in New Jersey, which was notably higher than the $10,000 limit imposed by the federal Tax Cuts and Jobs Act of 2017.
The resolution reflects the ongoing debate regarding tax equity and the financial treatment of high-tax states like New Jersey. Supporters of SR22 argue that reinstating the SALT deduction without limits would provide much-needed relief to residents facing financial hurdles. Critics may view this effort as an attempt to shift the tax burden back onto federal revenues, which could provoke discussions on budget implications for the federal government. The resolution seeks to mobilize congressional action to address this perceived inequity in federal tax policy.