N.J. House Democrats slammed for support of spending bill without SALT deal

Dems previously vowed to oppose the bill unless it included change to SALT deduction cap

By: - August 9, 2022 5:54 pm

Rep. Mikie Sherrill, who dubbed the summer of 2021 “the summer of SALT” as she campaigned to eliminate the deduction cap on state and local taxes, says she will support D.C. Democrats' spending bill. (Photo by Chip Somodevilla/Getty Images)

Three New Jersey Democrats who pledged to oppose tax legislation that did not repeal a cap on state and local tax deductions are facing Republican criticism over their backing of a $485 billion bill in Congress that leaves SALT unchanged

Reps. Josh Gottheimer, Tom Malinowski, and Mikie Sherrill had pledged over the last year to oppose tax measures that did not raise or remove the $10,000 SALT deduction cap, which will expire at the end of 2025 if lawmakers make no move to extend it.

But this week, all three said they would back the Inflation Reduction Act despite the removal of provisions that would have eliminated the $10,000 limit, and they’re insisting it’s not an about-face. The spending bill won approval in the U.S. Senate on Sunday and is expected to go before the House on Friday.

The Democrats said they support the bill because it helps New Jerseyans.

“My line in the sand was always the same: Does it affect families in my district, small businesses in my district? And the answer is no, no new taxes for families and small businesses,” Gottheimer said following an unrelated press conference in Fair Lawn Tuesday.

Sherrill echoed the sentiment in a statement released Monday, saying her constituents would also be spared tax increases under the bill. Malinowski said Affordable Care Act premium subsidies extended by the bill would aid those in his district.

Republicans, who have targeted Malinowski in particular as they attempt to regain control of Congress after November’s midterm elections, charge the lawmakers have walked back a promise they first made to constituents in 2018, when the three campaigned on rolling back the cap.

“Putting aside the partisan politics of it, it’s just bad for the credibility of government and our institutions,” Republican State Committee Chair Bob Hugin said, adding. “And it’s just really pathetic that you look for excuses. Just admit it. You didn’t have the political courage to stand up to Nancy Pelosi.”

On Monday, the New Jersey GOP delivered empty salt shakers to Sherrill’s and Gottheimer’s offices, with notes reading, “We always knew you weren’t worth your SALT.”

The SALT deduction was capped in 2017 with the passage of the Tax Cut and Jobs Act. The additional federal revenue helped pay for cuts to individual tax rates made by the bill. Removing the cap would reduce federal tax revenue by roughly more than $100 billion each year, according to a 2019 analysis by the Tax Foundation, a right-leaning think-tank based in Washington, D.C.

Though national Republicans broadly backed the 2017 bill, support among Republicans in New Jersey’s congressional delegation was anemic.

SALT-focused Democrats have said they support the Inflation Reduction Act because it would reduce their constituents’ tax burdens.

The legislation would not cut tax rates, but it would provide tax credits for residents to purchase electric vehicles, replace appliances with energy-efficient ones, or install electric heating and cooling systems. It would limit out-of-pocket prescription drug costs for elderly residents enrolled in Medicare to $2,000 annually, while limiting monthly insulin costs to $35 for the same group.

“It’s a huge win for our families. It’s fully paid for and by the way, it helps pay down the debt,” Gottheimer said. “You add all those things up and it’s a huge win for New Jersey.”

Those provisions could reduce costs for some, though Hugin said the cost of the bill’s revenue raisers — including a 15% minimum corporate tax for businesses with more than $1 billion in income, a 1% tax on stock buybacks, and billions in funding for IRS tax enforcement — would be passed onto consumers.

Though a small group of Democrats in high-tax states have railed against the SALT cap — Sherrill dubbed the summer of 2021 “the summer of SALT” as she campaigned to eliminate the deduction cap — other Democrats, especially those in the party’s progressive wing, have increasingly viewed an uncapped SALT deduction as a giveaway to wealthy residents.

“This was a smart move by federal representatives to leave out a SALT cap repeal, both from a policy and public relations perspective,” said Sheila Reynertson, senior policy analyst at progressive think-tank New Jersey Policy Perspective. “Including a big tax cut for wealthy individuals would have completely undermined the provisions in the bill that make the tax code fairer.”

New Jersey’s state and local tax burden is among the highest in the country. Only five other states — New York, Connecticut, Hawaii, Vermont, and California — had higher local and state tax burdens in 2022, according to an analysis by the Tax Foundation.

In 2021, the state’s average property tax bill was $9,284, according to statistics maintained by the Department of Community Affairs. 

Sophie Nieto-Muñoz contributed to this article.


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Nikita Biryukov
Nikita Biryukov

Nikita Biryukov most recently covered state government and politics for the New Jersey Globe. His tenure there included revelatory stories on marijuana legalization, voting reform and Rep. Jeff Van Drew's decamp to the Republican Party. Earlier, he worked as a freelancer for The Home News Tribune and The Press of Atlantic City.