Washington, DC – Yesterday, Representative Mikie Sherrill (NJ-11) appeared in front of the Committee on Ways and Means’ Subcommittee on Select Revenue to urge passage of her bipartisan SALT Relief and Marriage Penalty Elimination Act, H.R. 2624. Representative Sherrill’s bill is co-sponsored by Representatives Elise Stefanik (R-NY), Peter King (R-NY), and Gil Cisneros (D-CA), and endorsed by the American Federation of Teachers and National Association of Realtors.
Full text below:
Thank you, Chairman Thompson, Ranking Member Smith, and Members of the Committee for the opportunity to testify today.
The 2017 tax bill’s cap on the state and local tax deduction, known as “SALT,” is the number one issue I hear about in North Jersey. Since 1913, the SALT deduction has protected many taxpayers from double taxation by allowing them to deduct all state and local taxes from their federal tax liability. That all changed in 2017, when the Tax Cuts and Jobs Act imposed a $10,000 cap on the SALT deduction.
The SALT cap calls into question the very notion of federalism that underpins our government. Let’s be clear: this policy is unprecedented. It violates 150 years of settled federal tax law. And as my friend and New Jersey colleague, Rep. Pascrell, noted earlier: this is a double-tax, and it is punitive.
New Jersey is one of four states challenging the SALT cap in federal court because this is a direct, targeted assault on particular states and particular communities. By capping deductions on state and local taxes, the 2017 tax law imposes a penalty on taxpayers based solely on the circumstances of where they live. It interferes with cities and states’ authority to make their own choices about how to invest in and govern themselves.
Mr. Chairman, nothing is more important to peoples’ daily lives than the ability to afford to live and work in safe communities with good schools and strong public and private resources. Congress made that much harder for tens of thousands of New Jersey families, the ones I represent.
There is a misconception that the SALT deduction does not help the middle class, or working families. That is certainly not true in New Jersey.
In 2016, every county in New Jersey – except one – had an average SALT deduction above $10,000. In Morris County, the average SALT deduction in 2016 was more than $23,500.
As Mr. Pascrell has pointed out, the vast majority of New Jersey residents affected by the SALT are households with middle incomes between $75,000 to $200,000. Just think what that does for teachers in my district.
Families in my community have seen their taxes go up because of the SALT deduction cap and, as a result, they are questioning whether or not they can afford to live in New Jersey.
Don’t take my word for it. A recent survey from the New Jersey Society of Certified Public Accountants showed that 60-percent of respondents said that the Tax Cuts and Jobs Act increased the number of clients they would advise to leave the state.
This highlights the failure of the 2017 tax bill. The non-partisan Congressional Research Service recently released a report on economic effects of the 2017 Tax Cuts and Jobs Act. Let me quote it: “On the whole, the growth effects show a relatively small (if any) first-year effect on the economy.”
This trillion-dollar tax law hurt small New Jersey businesses without helping the economy. It increased the deficit instead of increasing wages. It penalized married couples filing jointly. And in a state like New Jersey, it only further penalizes my neighbors who send more money to Washington in federal tax dollars - and get back less – than residents of almost any other state.
Here’s a message I received from Mayor Bruce Harris of Chatham Borough in my district: “The story for Chatham Borough is pretty simple. The average property tax bill is about $14,100, so 40% is no longer deductible. Obviously that impacts people's pockets; it also impacts housing values. NJ is a ‘payer’ state - it sends much more to the federal government than it receives back. New Jerseyans produce a good share of the nation's wealth, but are being penalized for that. And, need I mention that we can't even get decent funding from the feds for infrastructure repairs such as the Gateway Tunnel?”
I understand why my constituents do not feel Washington is working for them. The SALT cap is simply taking money out of the pockets of New Jerseyans and rewarding mostly-wealthy residents in states that don’t share our commitment to invest in quality schools and public services.
What’s more, the SALT tax cap is an active threat to penalize any state or local government that decides to invest in its future. That is why New Jersey and three other states are challenging it in federal court.
This administration, unfortunately, is arguing that the SALT cap is not a “gun to the head” of states. That may be true. But, as a federal judge pointed out in a hearing just last week, “…it’s a rope to the neck with a gradual squeezing over time.”
While I am committed to full repeal, I also owe it to the people of New Jersey to offer proposals that can garner bipartisan support.
That’s why I recently introduced the bipartisan SALT Relief and Marriage Penalty Act with Representatives Stefanik, King, and Cisneros. My bill, H.R. 2624, would make the SALT deduction equal to the standard deduction taken by taxpayers: $12,000 for individual filers; $18,000 for Head of Households; and $24,000 for joint filers.
Mr. Chairman, these are the hardworking people across this country being hurt. We owe them a solution and we owe them a vote. Thank you.