Today, Congressman Josh Gottheimer (D-5) voiced his support of Governor Phil Murphy and Attorney General Gurbir Grewal’s lawsuit against the IRS and US Treasury Department following the the “gutted” State and Local Tax (SALT) deduction.

Gottheimer slammed the feds, saying that predominantly Republican “moocher states” had been taking advantage of SALT for decades, and that New Jersey had been “hosed”.  Via a telephone conference, Gottheimer said described the suit as the attorney general fighting back at the IRS’s “massive regulatory overstep in their rule making on charitable tax deduction.”  Gottheimer added, “I worked with Mr. Sweeney, Assembly President Coughlin, and the governor’s office.  We started talking in 2018 and we found that 100 programs in 33 states had utilized deductions to help.”

He described the process as local governments establishing charitable funds, tax payers contribute, and they then get a federal tax credit as if a charitable tax contribution had been made.  “The courts ruled on it and the IRS allowed this.”  The congressman said that Trenton had been urging towns to take up to 90 cents on the dollar.  “Paramus could set up a charitable fund for law enforcement or parks and rec.”

Gottheimer said courts claimed the charitable contributions were deemed too ambiguous, or unclear to show a direct benefit.  “After they gutted SALT and 10k, NJ passed this law,” he said.  “Mostly red states have been, historically, the biggest users of their tax payer charity.  New Jersey does it and suddenly they say you can’t do this.  They’re sticking it to us, just like us with SALT.   It gives an extra benefit for the red states and sticks it to us in NJ and raises our taxes.  This suit is exactly right.  You can’t hose us, this is a fight back.”

In a statement released this afternoon, Grewal said, “Our message to the IRS today is simple. No matter how many times you change your rules – from capping the SALT deduction to reversing your longstanding approach to charitable donations – we will challenge you in court.  Our residents already pay more to the federal government than we get in return. That is why I remain committed to standing up for New Jersey taxpayers in the face of this onslaught coming out of Washington.”

“This is not a fight we asked for,” Governor Murphy said in the statement, “but it is one we are proud to wage – on behalf of our taxpayers, and the countless others in our fellow states who are realizing now that they are financial collateral damage to the Trump administration’s rank politicization of the tax code.” Murphy called it an “unfair and unconstitutional tax” shouldered by New Jersey residents.

Responding to the lawsuit, NJGOP Chairman Doug Steinhardt released a statement, calling the suit “a political stunt and another waste of taxpayer money.”  Steinhardt took aim at the governor in particular.  “If Phil Murphy really cared about the infamous property tax burden that all New Jersey families carry, he would have addressed it in any of his budgets or through legislation in Trenton. He has raised taxes and increased spending at every turn.” The Republican chairman said that to lift the SALT cap “we need to send representatives to Washington that can actually have a conversation with President Trump. Right now, we have a group of Trump protesters like Tom Malinowski who spend their time trying to impeach the President rather than improve New Jersey.”

Referring to the rates utilized in other states, Gottheimer said that some charts vary from 10-100% for their deductions.  “They’ve literally been using this tax deduction for decades,” Gottheimer said.  “We do it, they turn around and they yank it because God forbid they do anything to cut taxes.  I talked to the treasury secretary about this—we had a small group meeting—he even said to me at the time they were looking for ways to grandfather in the moochers and they did: they found the carve-out for them. It’s unbelievably galling.  It’s a one-two punch here.  We finally find a way to get tax relief to NJ and they say not so fast, they stick it to us again, it’s outrageous.”