NEW JERSEY POLICY PERSPECTIVE VICE PRESIDENT JON WHITEN:

“Today the House of Representatives helped America take a step backward by passing – with the help of one New Jersey Congressman – an expensive and inequitable tax proposal that will be a disaster for New Jersey.

Congressman MacArthur chose to put his political party ahead of the people of New Jersey and his own constituents by voting for a bill that would deliver the bulk of its benefit to the state’s wealthiest families and tee up deep cuts to the public services, programs and investments on which all New Jerseyans rely – all while leading to a tax hike for more than 1 in 4 New Jersey families.

Thankfully, he was the lone New Jersey Representative to do so, with the other 11 members – including fellow Republican Congressmen Frelinghuysen, Lance, LoBiondo and Smith – having the clarity to see this legislation for what it is: an expensive and needless tax break for the wealthy and for large corporations that will no doubt be paid for by working families across America once the bill comes due.”

What This Means for New Jersey

Once fully phased in, the House bill:

• Gives New Jersey’s wealthiest 1 percent of taxpayers an average tax break of $25,100 tax break a year.
• Raises taxes on more than 1 in 4 New Jersey households (27 percent); these families would pay an average of $2,200 more in a year in federal taxes. This is the third highest share of households with a tax increase of all 50 states.
• Delivers 67% of the tax cut in New Jersey to the state’s wealthiest 5% of households (incomes above $440,000) while spreading just 28% of the tax cut amongst the bottom 60% of households (incomes under $111,000).
• Results in an estimated net total tax increase of $137 million on the people of New Jersey without any public investment to show for it.
• Completely eliminates the ability of New Jersey taxpayers to deduct state income and sales taxes from their federal taxes – currently 1.8 million New Jersey households (40 percent) tax one of these deductions, which are worth a cumulative $17 billion a year.
• Curtails the ability of New Jersey taxpayers to deduct property taxes from their federal taxes by capping the deductible amount at $10,000 – a statewide analysis finds that the majority of Garden State families who take this deduction would no longer do so under the House bill. That’s because even though they’d still technically be able to take the property tax deduction, many would choose not to because the combination of itemized deductions (which would no longer include state income and sales taxes) would be smaller than the standard deduction. This would be a bad deal for many taxpayers even though the House bill makes the standard deduction more generous.
• Squeezes states like New Jersey on both ends: deep cuts to federal programs would reduce services for state residents, at the very same time the loss of key federal tax deductions would make it harder for states like New Jersey to raise enough revenue to provide a current baseline of services – much less make up for reduced support from the federal government.

Background and related reports:

• Fast Facts: New Jersey Third Hardest Hit State Under House Tax Proposal (https://www.njpp.org/budget/fast-facts-new-jersey-third-hardest-hit-state-under-house-tax-proposal)
• State and Local Tax Deductions Benefit Tens of Thousands of New Jerseyans of All Incomes in Every Congressional District (https://www.njpp.org/budget/state-and-local-tax-deductions-benefit-tens-of-thousands-of-new-jerseyans-of-all-incomes-in-every-congressional-district)