WASHINGTON, D.C. – In a letter submitted during the required public comment period, U.S. Senators Bob Menendez and Cory Booker today again called on Trump IRS Commissioner Charles Retting to withdraw the Administration’s proposed regulations that would raise the property tax burden on hundreds of thousands of New Jersey families, calling the decision “politically motivated.”
In a comment letter to Rettig, the Senators outlined their ongoing opposition to the IRS proposed regulation limiting the ability of taxpayers to deduct charitable contributions from their federal taxes: “We believe this decision was politically motivated and will lead to millions of middle class families in New Jersey and around the country paying more in taxes and being taxed twice on the same dollar,” they wrote.
Sen. Menendez, who is a senior member of the Senate Finance Committee that sets national tax policy, has been an outspoken critic of the Administration’s tax plan which eliminated the State and Local Tax Deduction (SALT). Over the past months, he’s spoken out against the confirmation of Rettig as IRS Commissioner both on the Senate floor and in letters.
The Senator also grilled Mr. Rettig, about the Trump Administration’s repeated efforts to increase the property tax burden on middle-class New Jerseyans and warned him about using the IRS as a political weapon before voting against him in the Senate Finance Committee.
Sen. Menendez is the author of legislation in the U.S. Senate to fully restore the State and Local Tax Deduction (SALT). He also led the New Jersey Congressional delegation’s initial response to the announcement by the IRS that it intended to issue the new rules effectively blocking New Jersey’s efforts to protect its taxpayers from the Trump Tax Law’s $10,000 cap on SALT deductions, resulting in the double-taxing of up to 1.8 million, or 40 percent of New Jersey taxpayers.
When the Trump 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. Unfortunately, the Republican legislation passed the Senate despite Menendez’s objections, and was signed by President Trump.
The full Menendez-Booker letter is available here and follows:
October 11, 2018
Dear Commissioner Rettig:
We are writing to express our opposition to the Internal Revenue Service’s (IRS) proposed regulation (REG-112176-18) limiting the ability of taxpayers to deduct charitable contributions from their federal taxes. We believe this decision was politically motivated and will lead to millions of middle class families in New Jersey and around the country paying more in taxes and being taxed twice on the same dollar.
The IRS’s proposed regulation would require taxpayers to subtract the value of any state or local tax credit they receive from the value of their federal deduction, if the credit is valued greater than 15 percent. In addition to adding needless complexity for families, this effectively undermines state and local tax credit programs that are designed to incentivize charitable contributions. In addition, it flies in the face of the broad latitude and flexibility the Constitution provides states in developing their fiscal policy and raising revenue.
As you may know, 32 states and the District of Columbia have for years implemented programs that provide state or local tax credits as a way to incentivize charitable donations. Some states, like Georgia and Louisiana for example, offer dollar for dollar state tax credits for donations made to state-approved funds. The IRS has blessed such programs and allowed for the full deductibility of donations from taxpayers’ federal tax liability. Indeed, in an IRS Chief Counsel Advisory memo published in 2011, the IRS cited various case law to support the conclusion that any state or local tax benefit received by the donor should not be considered income or a thing of value. Rather, the memo concludes that a state or local tax credit should be treated as a reduction in tax liability, and thus should not reduce the value of the federal charitable deduction.
The proposed regulations would upend years of precedent and instead, administer the tax code in a partisan and biased manner. In IRS Notice 2018-54, the Agency made unwarranted accusations that states are attempting to “circumvent the new statutory limitation on state and local tax deductions” and essentially warned taxpayers from making donations to these charitable funds. This selective targeting more than suggests a partisan motivation underlying these regulations.
The nation’s tax laws must be applied fairly and equally. Middle class families should not be forced to pay taxes twice on the same dollar so CEOs and corporations can reap huge windfalls. We urge you to withdraw this proposed regulations and stop attempting to raise the property tax burden on hundreds of thousands of New Jerseyans.
 CCA 201105010