Bill Text: NJ ACR45 | 2018-2019 | Regular Session | Introduced
Bill Title: Opposes elimination of federal tax deduction for state and local taxes.
Spectrum: Partisan Bill (Democrat 3-0)
Status: (Introduced - Dead) 2018-01-09 - Introduced, Referred to Assembly Appropriations Committee [ACR45 Detail]
Download: New_Jersey-2018-ACR45-Introduced.html
ASSEMBLY CONCURRENT RESOLUTION No. 45
STATE OF NEW JERSEY
218th LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2018 SESSION
Sponsored by:
Assemblyman ERIC HOUGHTALING
District 11 (Monmouth)
Assemblywoman JOANN DOWNEY
District 11 (Monmouth)
SYNOPSIS
Opposes elimination of federal tax deduction for state and local taxes.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel.
A Concurrent Resolution opposing elimination of the federal tax deduction for state and local taxes.
Whereas, The federal deduction for state and local taxes was one of the original six deductions under the income tax code when it was enacted in 1913; and
Whereas, Virtually every person who itemizes their taxes claims a deduction for state and local taxes; and
Whereas, Taxpayers in states with a large share of high-income taxpayers and relatively high state and local taxes, such as New Jersey, are more likely to benefit from the state and local tax deduction than others; and
Whereas, Forty-one percent of New Jerseyans use the state and local tax deduction per year, claiming an average deduction of $17,200, and three of the top 10 counties nationwide that claim the largest average state and local tax deduction are in New Jersey; and
Whereas, President Trump and the Speaker of the United States House of Representatives have each proposed tax plans that would eliminate the state and local tax deduction; and
Whereas, Eliminating the federal deduction for state and local taxes would effectively tax the same income twice, as these taxes are mandatory payments; and
Whereas, Elimination of the state and local tax deduction would increase the marginal tax rates for taxpayers, shrink disposable income, and harm the economy; and
Whereas, The state and local tax deduction benefits middle-class taxpayers, as every person who pays state and local taxes may reap the benefits of the deduction; and
Whereas, By eliminating the state and local tax deduction, Congress would shift the intergovernmental balance of income taxation and limit state and local control over their own taxation systems; and
Whereas, Abolishing the state and local tax deduction would constrain policy options available to states and local governments facing economic hardships and increased responsibilities due to the devolution of federal programs; and
Whereas, In New Jersey, the average federal tax increase as a result of eliminating the state and local tax deduction would be $3,552; and
Whereas, The state and local tax deduction not only puts more money in the pockets of middle-class New Jerseyans, but it bolsters state and local governments and allows elected officials to more easily invest in middle-class job growth; and
Whereas, A diverse group of nonpartisan institutions representing state and local governments oppose the elimination of the state and local tax deduction, including the Council of State Governments, the National Association of Counties, the National Governors Association, the National Conference of State Legislatures, the National League of Cities, the United States Conference of Mayors, and the International City/County Management Association; and
Whereas, The state and local tax deduction supports infrastructure, education, and economic growth, and provides state and local governments with the financial flexibility to meet the needs of residents; now, therefore,
Be It Resolved by the General Assembly of the State of New Jersey (the Senate concurring):
1. This House opposes the elimination of the federal income tax deduction for state and local taxes.
2. Copies of this resolution, as filed with the Secretary of State, shall be transmitted by the Clerk of the General Assembly or the Secretary of the Senate to the President of the United States, the Speaker of the United States House of Representatives, the Majority and Minority Leaders of the United States House of Representatives, the Majority and Minority Leaders of the United States Senate, every member of the New Jersey delegation to the United States Congress, the Chairman of the United States Senate Finance Committee, and the Chairman of the House Ways and Means Committee.
STATEMENT
This resolution opposes the proposals made respectively by the President and the Speaker of the House of Representatives to eliminate the federal tax deduction for state and local taxes.
The federal deduction for state and local taxes was part of the original tax code over 100 years ago, and is an important aspect of the relationship between the federal government and the states. Virtually every person who itemizes their taxes elects for the state and local tax deduction, and thereby effectively avoids a double tax on the same income.
States like New Jersey take particular advantage of the state and local tax deduction because New Jerseyans pay a relatively higher tax rate, and New Jersey has a large proportion of high-income earners. New Jersey has three of the top 10 counties nationwide that claim the largest average state and local tax deduction and 41 percent of New Jerseyans use the state and local tax deduction per year to claim a Statewide average deduction of $17,200. This saves on average $3,552 off of an individual tax burden. This tax relief not only puts more money in the pockets of middle-class New Jerseyans, but it also bolsters state and local governments and allows elected officials to invest more easily in middle-class job growth.
Beyond the effects these proposed plans would have on New Jersey, elimination of the state and local tax deduction would have wide-ranging impacts across the country. Eliminating the deduction would reduce the policy options available to state and local governments facing economic hardships and increased responsibilities due to the reduction of federal programs. The state and local tax deduction supports infrastructure, education, and economic growth, and should be maintained to encourage the prosperity of municipalities nationwide.
