New Jersey Democrats are pushing back against President Joe Biden’s scaled down $1.75 trillion spending bill, saying it falls short of their efforts to see a $10,000 cap on state and local property tax deductions lifted.
The spending plan unveiled Thursday morning takes out paid family leave in a bid to win support of all 50 Democrats in the U.S. Senate, whose every vote is needed to push through the plan. It’ll be paid for by nearly $2 trillion in corporate tax hikes. Democrats are hoping to tie it with the vote on a $1 trillion infrastructure package, which could include funding for the long-stalled Hudson River replacement tunnels.
But the spending proposal leaves in the $10,000 SALT cap, a product of the 2017 Republican-led federal tax cuts, which opponents say primarily hurt higher-tax states like New Jersey and New York.
“Building Back Better demands tax fairness for middle-class Americans. And tax fairness demands restoration of the SALT deduction in line with President Biden’s promise not to raise taxes on the middle-class,” reads an Oct. 28 statement from U.S. Rep. Bill Pascrell, D-9th District.
The final text of the spending bill, Pascrell added, needs to include a repeal of the SALT cap, which he decried as “double taxation” for residents in New Jersey, where the average tax bill can sometimes be twice as much the limit.
An April letter from Gov. Phil Murphy and six other Democratic governors estimated that the cap has cost New Jerseyans an added $3 billion in annual taxes.
In 2018, the nonprofit Tax Policy Center estimated that completely repealing the SALT cap would cost the federal government $620 billion of tax revenue between 2018 and 2028.
A law Murphy signed last year is meant to soften the blow of the $10,000 cap by shifting the timing on when many businesses file their taxes.
State financial officials noted that a tax law Gov. Phil Murphy signed last year to soften the blow of the $10,000 cap on state and local property tax deductions has shifted the timing on when many businesses file their taxes.
Murphy, who hosted Biden in New Jersey this past Monday to promote the president’s proposed infrastructure package, likewise said this afternoon that Democratic leadership needs to push through a repeal on the SALT cap.
“I look forward to working with our congressional delegation to ensure the final bill also includes SALT deduction cap relief,” he said in a more tepid statement. “The SALT deduction cap was the largest tax hike on middle class families in our state’s history, and I will not stop fighting until New Jersey gets the relief we deserve.”
The spending proposal includes $400 billion for expanded child care and pre-school; $200 billion for the expanded child and earned income tax credits; and $555 billion for clean energy and climate initiatives, plus billions more for other top social safety net agenda items.
“Quite simply, this plan is nothing short of transformative, and it will be achieved not on the backs of middle class taxpayers but by asking the wealthy and large corporations to pay their fair share,” Murphy added.