NJPP: Statement on SALT Workaround (S1893) Bill Signing
This morning Governor Murphy signed S1893, which allows municipalities to establish charitable funds and permits taxpayers to classify tax payments as donations. The bill is designed to workaround the new $10,000 state and local tax (SALT) deduction limit established in the 2017 federal tax law.
New Jersey Policy Perspective President, Gordon MacInnes:
“If approved by the Trump administration – a big if – this workaround may benefit New Jerseyans who can no longer deduct their full state and local taxes. However, efforts to restore fairness to the tax code must extend far beyond SALT. The fact is, the 2017 federal tax law is still a massive redistribution of wealth to the nation’s highest earning individuals and corporations, even with a cap on SALT deductions.
New Jersey’s wealthiest families, those with annual incomes over $1 million, will still see a windfall from the new tax plan. This remains an opportune time for the state to pursue bold tax reform that recaptures what the federal government gave away to the already wealthy and well-connected.”
Top 1% benefit most from SALT workaround:
The wealthiest 1 percent of families (those with annual incomes over $1.1 million) would receive 54 percent of the benefit from a SALT workaround. Nearly every family in the top 1 percent – 99.9 percent of them, in fact – would benefit, with an average tax cut of $79,460 a year, or 2.5 percent of their average incomes.
Minimal benefit for most New Jerseyans:
The bottom 80 percent of families (those with annual incomes under $142,000) would receive less than 1 percent of the benefit from such a policy. Just 10 percent of these families would benefit at all, and their average tax cut would be $75 a year, or less than 0.1 percent of their average incomes.
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