VIDEO: Menendez Takes Fight against Trump-GOP Tax Scam to Senate Floor

VIDEO: Menendez Takes Fight against Trump-GOP Tax Scam to Senate Floor

Joins Democratic Leader Schumer to force Senate vote on repeal of unfair IRS rule that blocked states’ workarounds of harmful cap on state and local tax deductions (SALT)

 

WASHINGTON, D.C. – U.S. Senator Bob Menendez, a senior member of the tax-writing Senate Finance Committee who has led the fight in the Senate against the Trump tax scheme that has harmed New Jersey middle class families, spoke today on the Senate floor before joining Democratic Leader Chuck Schumer in forcing a vote on a resolution to repeal unfair IRS rules blocking state workarounds of the harmful caps on state and local tax (SALT) deductions.

The SALT deduction allows taxpayers to write-off taxes paid at the state and local level from their federal income tax bill so they won’t be subject to being taxed twice on the same dollar. In addition to helping families avoid double taxation, the SALT deduction supports the ability of communities, cities, and states to raise their own revenues and fund critical investments in public education, infrastructure, social services, and public safety.

In 2017, about 30% of taxpayers claimed the deduction, and more than 80% of those filers earned under $200,000—middle class in high cost-of-living states. In New Jersey, 1.8 million or 40% of taxpayers deducted their local property and state income taxes in 2016, the last year the data is available, averaging $18,000 per deduction.

Earlier this year, Sen. Menendez and Congressman Bill Pascrell, Jr. (N.J.-09) introduced the bicameral and bipartisan Stop Attacking Local Taxpayers (SALT) Act of 2019, which would fully restore the SALT deduction, which has been part of the tax code since the federal income tax was created in 1913. It also restores the top individual income tax rate at 39.6%, the rate at which upper income was taxed prior to passage of the Trump Tax Law.

Sen. Menendez 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.

Here are the Senator’s full remarks:

“I rise to urge the Senate to reject new IRS rules designed to block efforts by homeowners across America to avoid the Trump tax law’s harmful caps on their state and local tax deductions. And I want to thank Leader Schumer and Ranking Member Wyden for this opportunity to exercise our authority under the Congressional Review Act to stop these IRS rules from taking effect.

“Two years ago, when President Trump and his allies rammed their corporate tax bill through Congress, 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 more in debt and an economy that’s even more rigged for big corporations and wealthy CEOs.

“Of course, as bad as the Trump tax bill is for the whole country, it’s even worse for New Jersey. That’s because even after borrowing over $1.5 trillion from China, the President still couldn’t pay for his deficit-exploding corporate tax cuts.

“So what did he do? He dipped into the wallets of New Jersey’s middle class by gutting the state and local tax deduction they used to write-off their property taxes.

“In 2016, 1.8 million or around 40 percent of New Jersey taxpayers deducted their property and state income taxes from their federal returns, averaging $18,000 per deduction. And more than 80 percent of those who deducted earned less than $200,000.

“So to say the Trump tax law was a giant hit job on New Jersey’s middle class is no exaggeration. Already, New Jersey families are paying the price.

“Earlier this month new data from ProPublica revealed that because of the new $10,000 cap on property tax deductions, home values in New Jersey have taken a huge hit.

“In fact, home values in Essex County, New Jersey declined more than any other county in America. And according to NJ.com, ‘of the 30 counties across our nation suffering the largest dip in home values, 16 of them are in the Garden State.’

“That’s why Governor Murphy and New Jersey’s legislative leaders took action to protect homeowners from getting hammered. They adopted a workaround that dozens of other states have on their books in some form - a local tax credit for charitable contributions to non-profits set up by our local governments. In return, taxpayers could receive a property credit worth up to 90 percent of their contribution.

“Other states have long used similar charitable contribution programs. For example, in Alabama, there’s a 100 percent tax credit available for contributions to private school scholarship funds. In Missouri, one program incentivizes donations to shelters for survivors of domestic abuse.
“The IRS long respected these programs – so I was hopeful New Jersey’s charitable contribution credits would provide relief to homeowners suffering under the Trump tax scam.

“Unfortunately, as soon as New Jersey and other states took action, the IRS reversed course and issued new regulations hamstringing this long-accepted type of charitable contribution program.

“These are harmful regulations the Senate has the opportunity to block today.

“Look, in an ideal world, New Jersey’s charitable contribution credit wouldn’t be necessary– because Congress would uphold the full state and local tax deduction as a bedrock principle of our tax code.

“And it’s a principle that I would especially expect my Republican colleagues to stand up for. Since the federal income tax’s creation in 1913, the state and local tax deduction has encouraged states to stand on their own feet.

“The state and local tax deduction encourages states to make smart investments, that, at the end of the day, make them less reliant on federal handouts.

“In New Jersey, we know that when we invest in public schools, we prepare our students to succeed in high-paying fields. In New Jersey, we know when we invest in mass transit, we connect workers to new jobs and opportunity.
“In New Jersey, we know that when we invest in public health and law enforcement, we all do better because our streets are safer and our families are healthier.

“And it’s no coincidence that New Jersey is one of the most economically productive states in the nation – to the betterment of all Americans, especially those in less productive states.

“M. President, isn’t that a good thing? Isn’t a state’s right to set its own tax policies a right worth defending?

“M. President, for as long as I can remember, I’ve heard my Republican colleagues talk about self-reliance. About personal responsibility. About protecting – and not punishing – success.

“Well, the Trump tax law was nothing short of a massive tax on the success of states like New Jersey.

“Likewise I’ve heard Republicans talk about states’ rights and the virtues of federalism. Well guess what? The state and local tax deduction is a bedrock of federalism!

“Today’s CRA vote is an opportunity for my colleagues across to actually to stand up for those principles of self-reliance, and states’ rights, and federalism. To walk the walk, instead of just talking the talk.

“I want to close by sharing a constituent letter I received earlier this year about what the property tax deduction meant to one New Jersey family.

“This past April, Leigh from Budd Lake wrote: ‘My husband and I just did our taxes today – and for the first time ever – we owe money. And not just a little, hundreds. We own a home and for the first time we are not able to itemize our deductions; our deductions in fact were cut in half. There is no incentive to us owning our home anymore. We are an average middle class family paying a mortgage and trying to raise three kids. I’m tired of our family being collateral damage in yet another political fight.’

“Leigh is absolutely right. New Jersey families shouldn’t have to foot the bill for massive handouts for big corporations.

“And to add insult to injury, while the new IRS rules crack down on New Jersey’s efforts to save families like Leigh’s money, last fall the Treasury Department made clear that corporations could continue to benefit from these same exact kind of workarounds.

“It’s not fair, it’s not right, and my constituents deserve better.

“I will continue to push for a long-term solution to this problem. I’ve introduced the ‘Stop Attacking Local Taxpayers” or SALT Act to restore the full deductibility of state and local taxes. Under my bill, the more you pay in property and state taxes, the more relief you’ll get.

“It’s the exact opposite of what the Trump tax bill says, which is that the HIGHER the cost of living is in your state, and the more you pay in state and local taxes, the more you owe the federal government come tax time. It makes no sense!

“The SALT Act deserves full consideration in the Senate. But in the meantime, we should use the opportunity before us today to help hardworking homeowners suffering under the Trump tax law.

“Join us, and let’s exercise our power the Congressional Review Act to do what’s right – and protect middle class families throughout New Jersey and the nation from higher property tax burdens.”

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