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As GOP Looks to Eliminate State Tax Deduction, New Jersey Democrat Wavers on Millionaires Tax

Posted: November 20, 2017 at 3:04 pm   /   by
Originally published on this site

New Jersey is potentially holding off hiking its income tax due to the possibility of the state and local tax deduction being eliminated in the GOP tax plan, according to the president of the New Jersey Senate.

“I’m actually very concerned for the people of this state if this Trump tax happens, and I think we’re going to have to re-evaluate everything once that happens,” Senate President Steve Sweeney said Nov. 15 in reference to hiking the state’s tax rate on the highest earners from 8.97 percent to 10.75 percent.

The Senate tax plan, which was voted out of the Senate Finance Committee Nov. 16, does away with the state and local tax deduction, a tax that allows taxpayers who itemize to deduct from their federal taxable income any property and income taxes paid to state or local governments. Eliminating the state and local tax deduction would provide roughly $1.3 trillion in new revenue for the U.S. government.

Sweeney, who previously maintained, according to the Observer, that “an increase in the marginal tax rate on income above $1 million would be the first bill the state Senate passes when Governor-elect Phil Murphy takes office in January,” appears to be softening his stance.

“I voted for it seven times,” Sweeney said, referring to the millionaires’ tax. “I’ve said it’s the top priority… But I’m actually getting very, very nervous now with what’s happening in Washington.”

President Donald Trump has been outspoken about reforming the tax code and has said he wants to sign a bill by Christmas.

Some Republican lawmakers, like Rep. Peter King, R-N.Y., from high tax states oppose the elimination of the state and local tax deduction.

“It will have damaging effect on the overall economy and also on individuals. It’s a terrible thing,” King said on an interview with  John Catsimatidis on AM970’s “The Answer” which aired Sunday.

Michel said New Jersey potentially stopping plans to raise its taxes shows the positive impact of tax reform.

“This is great news for both New Jersey and tax reform,” Michel said, adding:

The fact that New Jersey is taking a second look at raising their income tax is an excellent example of the horrible incentives caused under the current system. Today, taxpayers around the country are subsidizing New Jersey, New York, and California’s high-taxes, creating an incentive to continually raise taxes – they can just pass the tax on to federal taxpayers.

Ending the state and local tax will also level the playing field for taxpayers, Michel said.

“Eliminating [the state and local tax deduction] and using the savings to lower tax rates will result in a fairer and less complex tax code – a tax code that no longer allows a $3,000 deduction for a taxpayer in New York and a $900 deduction for someone making the same income living in Tennessee, for example.”

A vote on the Senate tax plan is expected after Thanksgiving.

The post As GOP Looks to Eliminate State Tax Deduction, New Jersey Democrat Wavers on Millionaires Tax appeared first on The Daily Signal.

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As GOP Looks to Eliminate State Tax Deduction, New Jersey Democrat Wavers on Millionaires Tax