WASHINGTON, D.C. – U.S. Senator Bob Menendez, a senior member of the Senate Finance Committee that sets federal tax policy, today blasted the Trump Administration’s use of the federal tax code to unjustly target New Jersey before voting against the President’s nominee for chief counsel of the Internal Revenue Service (IRS), Michael Desmond.

“This nominee comes before us just a few weeks into this year’s filing season, when our need for an IRS that treats all taxpayers fairly is clearer than ever,” Sen. Menendez said during a speech on the Senate Floor. “Make no mistake, President Trump, his administration, and the IRS have it out for New Jersey. Mr. Desmond would be the arbiter of how the IRS would interpret important tax issues affecting New Jersey. And I remain unconvinced that he will give New Jersey fair treatment under the tax code.”

The Senator cited the Trump Tax Law’s $10,000 cap on State and Local Tax (SALT) deductions that has resulted in the double-taxing of millions of middle class Americans living in high cost of living states like New Jersey. Of the 1.8 million New Jerseyans who claimed the SALT deduction in 2016, 80 percent earned less that $200,000.

“Already, thousands of taxpayers across America are grappling with the fallout of the Trump Tax Bill and its capping of the State and Local Tax or SALT deduction,” the Senator said. “Already, the IRS has reported an average 17 percent drop in the size of tax refunds this year. And already, the broken promises made by President Trump and his Republican allies are being laid bare.”

Sen. Menendez had held up Desmond’s nomination in response to arbitrary SALT-related rulemakings by the IRS and Department of Treasury, specifically the undermining of the Charitable Tax Deduction that allows states, including New Jersey, to deliver tax relief to their residents, and efforts by taxpayers to prepay their 2018 taxes ahead of the Trump Tax Law going into effect.

Earlier this month, Sen. Menendez and Congressman Bill Pascrell, Jr. (N.J.-09), a senior member of the tax-writing Senate Finance and House Ways and Means Committees, introduced bipartisan legislation to repeal the federal cap on state and local tax (SALT) deductions.

Remarks as delivered by Sen. Menendez:

M. President, I rise today in opposition to President Trump’s nominee for Chief Counsel of the Internal Revenue Service, Michael Desmond.

This nominee comes before us just a few weeks into this year’s filing season, when our need for an IRS that treats all taxpayers fairly is clearer than ever.

Already, thousands of taxpayers across America are grappling with the fallout of the Trump tax bill and its capping of the State and Local Tax or SALT deduction.

Already, the IRS has reported an average 17 percent drop in the size of tax refunds this year.

And already, the broken promises made by President Trump and his Republican allies are being laid bare.

They promised middle class families thousands of dollars in tax relief and a $4,000 raise in their salary. Instead, all they got was $1.5 trillion in more debt and an economy that’s even more rigged for big corporations and wealthy CEOs.

As bad as the Trump Tax Scam is for the whole country, it’s even worse for New Jersey families.

That’s because Republicans paid for a big chunk of their corporate giveaways by gutting the state and local tax deduction that New Jersey’s middle class families depend on to write-off their property taxes.

In 2016, 1.8 million people—that’s about 40 percent of all New Jersey taxpayers—deducted their property and state income taxes.

More than 80 percent of them earned less than $200,000. And the average deduction totaled $18,000– far above the arbitrary cap imposed by the Trump Tax Bill.

With tax season underway, many homeowners are just now realizing how badly their President ripped them off.

And to add insult to injury, the IRS issued haphazard guidance for the Trump Tax Bill that unfairly targets states like New Jersey simply trying to lessen the burden heaped on them by the GOP.

In the final days of 2017, just days after President Trump signed the GOP tax bill, New Jerseyans rushed to prepay their 2018 local property taxes and preserve their deductions before the new cap on the SALT deduction took effect.

But then came Trump’s IRS, which issued guidance to try to limit their ability to deduct property tax payments made in 2017 from their federal returns. A stunning backdoor attempt to retroactively apply the cap on property tax deductions without clear legislative text to warrant doing so.

Months later, the IRS again changed the rules on us by attacking New Jersey’s new charitable deduction tax credit program.

The IRS never had a problem when 32 other states offered tax credits for charitable donations. Only when New Jersey created a similar program did the IRS decide to change the rules.

Mr. Desmond would be the chief counsel of the IRS, the position directly overseeing the IRS’s interpretation of these rule changes.

Throughout his nomination, I was given no indication that Mr. Desmond would give fair treatment on these important issues affecting the state of New Jersey.

The full deductibility of state and local taxes has been a bedrock principle of our tax code since the federal income tax’s creation in 1913.

And the concept stretches all the way back to Alexander Hamilton’s writings about the autonomy of states under the U.S. Constitution.

This commonsense policy allows states to invest in things public safety, education, and infrastructure—the very things that make New Jersey a great place to live, work, and raise a family.

Make no mistake—the property tax deduction isn’t just important for homeowners. It matters to all New Jersey families.

It’s why our public schools rank among the best in the nation.

It’s why Save the Children named us the number one state in America to raise a child.

Well, I want it to stay that way.

We must protect the investments that make New Jersey a place where families thrive.

That’s why last month I introduced bipartisan legislation to fully restore the State and Local Tax deduction.

It’s called the SALT Act—which stands for “Stop the Attack on Local Taxpayers.”

Look, it’s no secret that in New Jersey and many of the nation’s most economically-productive states, families face high property tax bills and a high cost of living.

Well, our bill is designed to provide some relief.

Simply put, the more you pay in property and state taxes, the more relief you’ll get from our bill—and we help pay for it by repealing some of Trump’s most unnecessary tax breaks for the super wealthy.

It’s the exact opposite of what the Trump Tax Bill says, which is basically that the higher the cost of living is in your state and the more you pay in state and local taxes, the more you will owe to the federal government. It makes no sense.

Make no mistake, President Trump, his administration, and the IRS have it out for New Jersey. Mr. Desmond would be the arbiter of how the IRS would interpret important tax issues affecting New Jersey. And I remain unconvinced that he will give New Jersey fair treatment under the tax code.

And for that reason, I cannot support Michael Desmond for IRS Chief Counsel.

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