The Republican-led tax reform plan – called by many Democrats simply a “tax cut” plan for major corporations and the super wealthy – has the backing of President Donald Trump and seems poised for a Senate vote soon. The bill would drastically cut the corporate tax rate, and the Senate plan would also include a sort of “back-door” plan to repeal the Affordable Care Act by doing away with the requirement that people buy health insurance or pay a fine to the Internal Revenue Service.
The tax plan, as currently written, would also add an estimated $1.4 trillion to the federal budget deficit over the next decade.
While some parts of the plan seem open to debate depending upon which tax policy think tank you ask, long-sought tax relief for corporations appears to be a centerpiece of whatever plan comes down for a final vote. In the meantime, a great many New Jersey taxpayers will likely get socked, as they will be losing at least parts of the state and local tax deductions from their federal returns.
This loss of the so-called SALT protections is one reason all but one member of the New Jersey delegation voted against the tax plan that was approved by the House of Representatives. Both New Jersey senators, Bob Menendez and Cory Booker, have signaled opposition.
Rep. Josh Gottheimer, D-Wyckoff, a congressional freshman who earlier met with President Donald Trump on the issue, and has sought a bipartisan approach to a federal tax structure that’s in need of a fair and balanced overhaul, joined the vast majority of New Jersey lawmakers in opposing the plan that now seems increasingly likely to pass in the Senate.
“I want to get to yes, and I’ll continue working with both parties,” Gottheimer told The Record last week. “The legislation approved by the House and racing through the Senate sticks it to New Jersey and will make us less competitive. It’s a boon to other states that already suck up our tax dollars.”
As The Record’s Washington Correspondent Herb Jackson reported, the bill that passed the House would restrict the deduction for local property taxes and eliminate it for state income taxes. The Senate plan could be even harsher, possibly repealing both deductions entirely, starting Jan. 1.
This is perhaps one reason why the head of the New Jersey Chamber of Commerce, in breaking with the organization’s national branch, has also opposed the current legislation. Thomas Bracken, like many New Jersey elected leaders, including both Democrats and Republicans, voiced concern that the tax bill creates sets of winners and losers, from state to state.
“Tax reform should be something that every state benefits from. We do not,” Bracken said. “Being against the tax reform act, that’s about as pro-New Jersey as you’re going to get right now. So all I can say is that we have a very dangerous situation we have to avoid.”
Indeed, at least part of this “dangerous situation” might be avoided if the Senate were to slow things down, and extend thoughtful debate to a piece of legislation that could change the U.S. tax code measurably for many decades to come. While reform may be needed, this quick hit plan that appears to have little regard for the future of ordinary taxpayers is not the fix that is needed.