WASHINGTON, D.C. – Today, U.S. Senator Bob Menendez (D-N.J.), a senior member of the Senate Finance Committee that sets national tax policy, pressed Trump Administration nominees Justin Muzinich for Deputy Treasury Secretary and Michael Desmond for Chief Counsel for the IRS to commit to equal treatment of New Jersey’s charitable property tax credit program, which mirrors the structure of long-established tax credit programs on the books in 32 other states.
Senator Menendez was a vocal critic of the Trump Tax Bill signed into law last December, which dramatically increased the property tax burden on New Jersey families in order to finance massive tax cuts to big corporations. Earlier this year, Governor Phil Murphy signed legislation authorizing New Jersey homeowners to donate to charitable nonprofits established by their municipality, county, or school district in return for property tax credits worth up 90 percent of their contributions. Senator Menendez has been a critic of the IRS’s recent guidance that appears to target only blue-states, like New Jersey, that have developed charitable state-tax credit programs, while ignoring 32 other states, many of which are conservative, that operate similar or nearly identical programs for years.
After laying out the history of the IRS respecting similar programs on the books in 32 other states, many of which are conservative, Menendez questioned why the Administration was trying to overturn years of precedent without any changes to the law:
“I challenge you to show me, for example, where in the Trump Tax bill that passed into law did it prohibit state tax credit programs for charitable donations?” Menendez asked. “Because it’s not there. I sit on this committee. I can tell you what’s in it and what’s not. So I read the bill, and nothing in it prevents the 32 states that are already doing this to continue to operate their programs or additional states from developing new programs on their own. So here’s what my problem is going to be, gentlemen. You either treat my state and state’s similarly situated the same as the 32 other states. Or you take it away from the 32 other states which happen to be very red states. This is called the United States of America. Not the red and blue states of America. And so until I have a sense of satisfaction that that’s where we’re headed in being treated fairly and not having the IRS weaponized against certain states, I will have a problem with these nominations.”
The Republican federal tax law, which passed the Senate on a strictly Republican-only vote, will hurt many New Jersey taxpayers who pay more than $10,000 in state and local property taxes. Estimates indicate that more than 1-in-10 New Jersey households will see an increase in their federal income taxes.
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 response to the recent announcement by the Internal Revenue Service (IRS) that it intends to issue new rules to effectively block 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.