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Pascrell Reintroduces Repeal of Republican Middle Class Tax Hike

Legislation will fully restore federal State and Local Tax deduction, restore top marginal rate to pre-2017 levels

U.S. Rep. Bill Pascrell, Jr. (D-NJ-09), New Jersey’s only member of the tax-writing House Ways and Means Committee, today reintroduced his updated legislation to fully repeal the federal cap on state and local tax (SALT) deduction imposed by the Trump Tax Law of 2017.

“This year, middle class Americans are being squeezed like lemons not just by the pandemic, but the GOP tax scam which raised their taxes by arbitrarily capping the SALT deduction,” said Rep. Pascrell, who has spent years spearheading congressional opposition to the SALT cap. “Even before the pandemic strained resources of state and local governments, there was growing risk to critical services like police, firefighters, and teachers because of the pressure from the SALT cap. The Americans in states hit hardest by the SALT cap already shoulder a heavy tax burden. Fully repealing the SALT cap will help middle income New Jersey families and communities both. And raising the top rate back to pre-tax scam levels will restoring a critical degree of tax fairness to our slanted tax system. New Jerseyans know I will not rest until they see relief from the SALT cap.”

The Stop the Attack on Local Taxpayers (SALT) Act strikes the $10,000 cap and fully restores the SALT deduction. Providing further tax relief to families struggling during the pandemic, the measure also eliminates the cap retroactively. Further, the Pascrell plan restores the top individual income tax rate to 39.6%, the rate at which the highest bracket was taxed prior to passage of the Trump Tax Law. Rammed through the Republican-controlled Congress on a party-line vote in December 2017, the Trump Tax Law gave huge tax breaks to the super rich and giant corporations, while hiking taxes on the middle class and capping SALT at $10,000. 

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.  This bill would also allow teachers and first responders to deduct costs associated with their jobs, provisions that passed the House of Representatives in 2019 in conjunction with SALT cap relief.

The state and local tax deduction has been part of the tax code since the federal income tax was created in 1913, and dates back before the federal income tax to the Civil War when President Lincoln needed to fund union troops with state taxes but allowed for this deduction.

In 2017, about 30% of taxpayers claimed the deduction, and more than 80% of those filers earned less than $200,000 – middle class in high cost-of-living states.  In New Jersey, 1.9 million taxpayers deducted their local property and state income taxes in 2017, approximately 42% of New Jersey taxpayers, averaging $19,162 per deduction.

The SALT Act is sponsored by Reps. Pascrell, Donald Norcross (D-NJ-01), Andy Kim (D-NJ-03), Frank Pallone, Jr. (D-NJ-06), Albio Sires (D-NJ-08), Donald Payne, Jr. (D-NJ-10), Mikie Sherrill (D-NJ-11), Bonnie Watson Coleman (D-NJ-12), Joe Courtney (D-CT-02), and Jimmy Panetta (D-CA-20).

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