FOR IMMEDIATE RELEASE
May 23, 2018
Menendez Statement on Trump Administration’s
Attack on New Jersey Taxpayers
“It is absolutely unacceptable to use the IRS as a political weapon to target New Jerseyans”
WASHINGTON – U.S. Senator Bob Menendez, a senior member of the Senate Finance Committee that sets national tax policy and the leader in the U.S. Senate in the fight to preserve the State and Local Tax Deduction (SALT), reacted to the announcement today by the Internal Revenue Service that it intends to issue new rules that would unfairly target efforts to protect New Jersey taxpayers from being double-taxed by the Trump Corporate Tax Plan that limited SALT deductions. Earlier this month, the Senator joined Governor Murphy as he signed state legislation which allows municipalities to establish charitable funds where taxpayers can donate in return for a property tax credit.
“As appalling as it was for President Trump and Congressional Republicans to use tax reform as a way to exact political revenge against so-called blue states by limiting the state and local tax deduction, it is absolutely unacceptable to use the IRS as a political weapon to target New Jerseyans,”said Sen. Menendez. “I will not stand for it, and will use every tool at my disposal to protect the taxpayers of New Jersey.”
“The concept of incentivizing charitable contributions with state tax benefits, including credits, has long been found by the IRS to be acceptable,” the senator added. “This is not a theoretical question: 32 states and the District of Columbia have for years implemented similar funds, some of which offer dollar for dollar state or local tax credits in exchange for contributions. The only reasonable conclusion to draw is that the Trump Administration will stop at nothing to hurt New Jersey, and will always put petty partisan politics ahead of the people he has been sworn to serve.”
The Republican federal tax law, which passed the Senate on a strictly party-line vote, will hurt many New Jersey taxpayers who pay more than $10,000 in state and local property taxes. Estimates indicate that more than one-in-10 New Jersey households will see an increase in their federal income taxes.
To mitigate the federal tax law, the legislation, S-1893, allows taxpayers to donate to a charitable fund established by their municipality, county, or school district. In return for their donation, the taxpayer receives a credit on their property tax bill of up to 90 percent of the donation.
Taxpayers would then be able to claim their donation as a charitable deduction on their federal income tax return, preserving the deduction homeowners enjoyed for the more than 100 years since the federal income tax was instituted in 1913.
When the GOP tax plan was first being introduced, Sen. Menendez called it, “One giant hit job of New Jersey’s middle class.” The senator stood with middle class homeowners in Bloomfield, N.J., to highlight how the bill was a direct attack on New Jersey, and after two different versions passed the House and Senate, Menendez was named by Senate Democrats to the Tax Conference Committee to defend deductions essential to New Jerseyans. Republicans, however, never had any intention of listening to Democrats’ concerns and released a bill they negotiated in secret.
In the week leading up to the vote, Sen. Menendez took to Facebook Live to explain the tax bill, responded to Sen. Pat Toomey’s (R-Pa.) attack on states like New Jersey and New York, detailed how the bill specifically hurts New Jersey, and offered measures to restore the state and local tax deduction New Jersey’s middle class relies on.
Unfortunately, the Republican legislation passed the Senate despite Menendez’s objections, and was signed by President Trump.