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Reader says municipal tax revenue levels are unsustainable

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file photo by Boyd Loving

Given SALT deductions are now limited to $10,000 for property taxes, shouldn’t the Council and BOE be aware that the vast majority of Ridgewood residents have seen an effective tax INCREASE and be looking for ways to reduce the burden? Realized sales values suggest home values will need to decline in the next assessment, so unless they jack up the mill rate, municipal tax revenue levels are unsustainable?

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NJGOP Chairman Calls On Murphy To End Frivolous Lawsuits Against Trump Admin and Focus on New Jersey

the staff of the Ridgewood blog

Trenton NJ,  Yesterday after the Trump administration moved to block state efforts to work around a new limit on state and local tax deductions, Governor Murphy has said he is weighing legal actions.. New Jersey’s top Republican NJGOP Chairman Doug Steinhardt released the following statement:

Continue reading NJGOP Chairman Calls On Murphy To End Frivolous Lawsuits Against Trump Admin and Focus on New Jersey

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Internal Revenue Service Says New Jersey’s SALT “Charitable Tax Dodge ” a No Go

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the staff of the Ridgewood blog

River Vale NJ,Assemblywomen Holly Schepisi , “Several months ago I raised concerns that the IRS would disallow NJ’s proposed charitable contribution of property taxes workaround. I implored my fellow legislators to stop pushing gimmicks and instead focus on much needed reforms to how we fund schools, reforms to our pension and health benefit programs, reestablishing caps on property taxes and working to change how we fund things in this State while reducing our expenses. ”

Continue reading Internal Revenue Service Says New Jersey’s SALT “Charitable Tax Dodge ” a No Go

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Pascrell Fails to Accept Responsibility for New Jersey’s Failed Fiscal Policies

Bill Pascrell

“Pascrell Lambasts Latest Republican Tax Outrage”

July 25,2018

the staff of the Ridgewood blog

WASHINGTON D.C. ,  Today, Representative Bill Pascrell, Jr. (D-NJ-09), the Ranking Member of the Ways and Means Subcommittee on Trade, hammered the release of the so-called second phase of the Republican tax plan which announced that the egregious cap placed on federal deductions for State and Local Tax Deductions (SALT) would be made permanent.

“As New Jersey’s Yogi Berra liked to say, it’s déjà vu all over again. Another day, another attempt by congressional Republicans to stick it to Garden State. Already burdened with the highest property taxes in America, for years people in my state relied on the state and local tax deduction to provide their families with flexibility to pay their bills. Republicans took care of that, capping those deductions to help pay for a trillion-dollar tax cut for big corporations and big tycoons. Now Republicans are announcing the SALT cap is going to be made permanent to bedevil New Jerseyans for all time. We already know Republicans go out of their way to bring pain on the people of the Northeast. They said so themselves. But they keep trying to prove it again to us. We’ve had it with this garbage. The GOP tax scam should be overturned and the full state and local tax deduction reinstated. Let the top 1% pay their fair share and leave New Jersey the hell alone.”

Pascrell, made no mentions of the 50 or so years of unabated irresponsible fiscal policies of the state New Jersey or the “Garden State ” as he like to say. Pascrell like many New Jersey politicians likes to blame the abject failure of state policies on the federal government .

Pascrell has represented his district since January 1997 and in that time there has been massive flight of people and businesses out of the “Garden State” for far greener pastures .  New Jersey ranks at the top only in taxes and ranks near the bottom is business climate and quality of life . Perhaps he and his fellow  New Jersey representatives could spend far more time on the problems in the state of New Jersey and less time grand standing and name calling .

 

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Murphy Administration :Joins Lawsuit claiming federal government violated constitution by imposing arbitrary limits on state and local taxes that residents can deduct

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July 19,2018

the staff of the Ridgewood blog

Trenton NJ,  still dreaming, in what can only be described as a “hail mary” ,Attorney General Gurbir S. Grewal today joined three other states in suing the Trump Administration over its $10,000 cap on the federal tax deduction for state and local taxes (SALT).

Joining New Jersey in suing both the Internal Revenue Service and the Treasury Department were New York, Connecticut and Maryland. The lawsuit seeks to prevent the federal government from enforcing the SALT deduction cap, and to have the cap declared invalid.

Governor Phil Murphy welcomed the action.

“What the Trump Administration enacted with the SALT deduction cap was nothing more than a tax hike on our working and middle-class families and seniors,” said Governor Murphy. “I made a commitment to New Jerseyans to provide long-term property tax relief when I signed legislation to preserve deductibility by enabling municipalities to create charitable funds. We will continue to fight to protect local taxpayers and businesses and I applaud Attorney General Grewal and the states of New York, Connecticut and Maryland for their leadership and action in challenging the constitutionality of this assault on our states.”

“Today we are making good on our promise to fight for New Jersey taxpayers – by taking legal action to protect our residents and restore fairness to the tax code,” said Attorney General Grewal. “Simply put, the federal government violated the constitution when it imposed new, arbitrary limits on the amount of state and local taxes that residents could deduct on their federal tax returns.”

In 2017, the Federal Government adopted a significant change to the federal tax code. Previously, taxpayers who itemized their deductions could deduct from their federal tax liability all money paid for state and local income, property and sales taxes. Under the new code, however, the same taxpayers are only permitted to claim a comparatively small deduction of up to $10,000 for those taxes.

The lawsuit filed today notes that the so-called SALT deduction on individual federal tax liability has historically been recognized by Congress as essential under the Constitution. “A SALT deduction has been a part of every federal income tax law since the first federal income tax was enacted in 1861,” the complaint explains.

The lawsuit adds that the SALT deduction is necessary to prevent federal taxes from interfering with each state’s right to determine its taxation and fiscal policies, because federal taxes crowd the states out of traditional revenue sources like income, property and sales taxes.

The suit asserts that the federal government’s “drastic” decision to cap the SALT deduction at $10,000 will significantly increase the federal tax liability for residents of each of the plaintiff states, including New Jersey. Homeowners who could once deduct the full cost of their local property taxes now can only deduct a fraction of those taxes. That will increase the cost of owning a home, which in turn will depress home values.

To make matters worse, the states explain, the federal government went after these states deliberately. Treasury Secretary Steven Mnuchin even said, the point of the changes to the SALT deduction was to “send a message to the[se] state governments” that Washington wants them to change their spending policies. That effort to coerce states, the complaint notes, is another reason why the latest SALT changes are illegal.

Today’s joining of the federal lawsuit by Attorney General Grewal is the Attorney General’s latest action aimed at protecting New Jersey residents from oppressive new federal tax policies under the Trump Administration.

In May, Attorney General Grewal wrote the U.S. Internal Revenue Service (IRS) urging that it stop “playing politics” and drop its plan to enact a rule that would prevent New Jersey residents from claiming deductions for charitable contributions made to their local governments. Governor Phil Murphy had previously signed a law allowing residents to receive property tax credits for such charitable contributions.

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NJ Attorney General Asks IRS to Withdraw Proposal that Would Upend New Jersey’s Charitable Deduction Tax Credit Law

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AG Grewal to IRS: Stop “Playing Politics” with SALT Tax Guidance—or Face a Legal Challenge

May 27,2018

the staff of the Ridgewood blog

Trenton NJ,  Attorney General Gurbir S. Grewal today urged the U.S. Internal Revenue Service (IRS) to drop its “misguided” plan to enact a new rule designed to undermine a recent New Jersey law. That law – signed by Governor Phil Murphy earlier this month – allows residents to receive property tax credits when they make charitable contributions to their local governments.

The Trump Administration enacted a tax overhaul in December 2017 that placed, for the first time, a $10,000 cap on the federal deduction for state and local taxes (SALT). In response, New Jersey, New York and other states passed laws allowing residents to instead make deductible charitable contributions to their local governments, and to receive partial tax credits when they do so. “But in an unprecedented move,” Attorney General Grewal explained, the IRS just yesterday “announced plans to end the deductibility of such contributions.”

In a letter to IRS Commissioner David J. Kautter, Attorney General Grewal points out that the New Jersey tax credit law is similar to 100 laws enacted in more than 30 other states, and is consistent with longstanding IRS guidance and numerous court decisions that such contributions remain deductible. So “the IRS’s plan will upend over 100 state programs in a single rule—a nightmare for both states and the IRS.” Yet the IRS has given “no reason for [its] sudden about-face.”

“The IRS should not play politics. Instead, it must confirm its longstanding interpretation of federal law,” Grewal explains in his letter. “Should the IRS and Treasury Department continue down this path, New Jersey will have no choice but to challenge the new rule in court.”

Attorney General Grewal’s letter notes that the New Jersey law authorizes municipal and county governments and local school districts to establish “charitable funds for specific purposes” and to permit residents to gain partial property tax credits for donating to those funds. Across the states with similar programs, charitable funds “run the gamut” from those designed to aid natural resource preservation efforts to funds that help provide financial aid for college-bound children, support shelters for the victims of domestic violence and many other programs.

The Attorney General contends that the IRS’s decision runs counter to the federal Tax Code, which makes plain that deductions are permissible for “any charitable contribution … payment of which is made within the taxable year.”
“The statute is explicit that such contributions include gifts given to state governments and their political subdivisions,” Grewal notes. “The only remaining issue is whether such gifts are deductible if the contributor gets a tax credit in return.” While the IRS has previously “answered that question resoundingly in favor of laws” like New Jersey’s, the latest guidance “suggests that the IRS plans to tell states and taxpayers alike the answer is no.”
“I ask you to think twice before going down that misguided road,” Grewal warns the IRS Commissioner. “The IRS’s longstanding approach, supported by precedent and policy, supports what New Jersey has done.”

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Lance, Gottheimer Meet with IRS on SALT Prepayments

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photo U.S. Representatives Leonard Lance (NJ-07) 

IRS will Review Christie Executive Order
Feb 15, 2018

the staff of the Ridgewood blog

WASHINGTON D.C. , U.S. Representatives Leonard Lance (NJ-07) and Josh Gottheimer (NJ-05) hosted a meeting on Capitol Hill Thursday with Acting IRS Commissioner David J. Kautter. The IRS previously issued a ruling stating it would allow the deductibility of 2018 property taxes paid in 2017 only if the property taxes had been assessed in 2017. Lance and Gottheimer urged that the deduction should be expanded to include all 2018 property taxes paid in 2017, regardless of the date of assessment.
“Our meeting was productive. Over $300 million dollars in property tax prepayments were made by my constituents in late 2017 and I will continue to make the case that all 2018 property tax prepayments be fully deductible on 2017 tax returns. These payments were made in good faith and some payments were made before the IRS issued its unfair ruling. I also raised the important issue of comity between federal and state governments. The day the IRS issued its ruling, Governor Christie issued an executive order directing municipalities to accept property tax prepayments for all of 2018. I gave the Commissioner a copy of Governor Christie’s executive order to review,” said Lance, who was the first lawmaker to address the prepayment issue.

“New Jersey needs lower taxes for residents and for businesses of all sizes, especially after Tax Hike Bill gutted the State and Local Tax Deduction. Today, Rep. Leonard Lance and I sent the IRS Commissioner a clear, bipartisan message: don’t change the rules mid-game on New Jersey taxpayers. Allow the full deduction of all 2018 property tax prepayments. While I was encouraged by today’s meeting, I will continue to hold the IRS’s feet to the fire and fight for tax relief for North Jersey,” said Congressman Josh Gottheimer (NJ-5).

Earlier this year, Lance wrote to Kautter and requested the Agency reconsider IRS Advisory IR-2017-210 issued on December 27, 2017 regarding the tax deductibility of prepaid state and local property taxes. That ruling stated the IRS would allow the deductibility of 2018 property taxes paid in 2017 only if the property taxes had been assessed in 2017. Lance suggested the deduction should be expanded to all 2018 property taxes regardless of the date of assessment and introduced H.R. 4803, which would mandate it. Gottheimer is a cosponsor of H.R. 4803.

President Trump signed the Tax Act into law on December 22, 2017. The law clearly prohibits individuals from deducting the prepayment of future state and local income taxes, but does not mention whether or not the prepayment of state and local property taxes would be deductible. This led many individuals to prepay their entire 2018 property tax liability prior to the issuance of the IRS Advisory, believing that it would be deductible on their 2017 tax returns. Governor Christie issued an executive order on December 27, 2017, mandating that all municipalities in the State accept the prepayment of property taxes for the entirety of 2018. This action caused many more New Jersey residents to prepay their 2018 property tax bill than would otherwise have been the case.

“I will continue to seek either a bipartisan legislative solution or an IRS ruling fixing this problem. I thank Commissioner Kautter for his time and interest. I will continue to press the issue in Congress and with the IRS,” concluded Lance.

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Treasury Secretary Calls individuals looking to skirt new limits on deducting state and local taxes “ridiculous,”

Treasury Secretary Steven Mnuchin

February 13,2018

the staff of the Ridgewood blog

Washington DC, The idea that individuals will skirt new limits on deducting state and local taxes is “ridiculous,” Treasury Secretary Steven Mnuchin said in January, highlighting concerns that people might be able to pay property taxes and claim them as a charitable deduction.

The Secretary continued ,“Let me just say again from a Treasury standpoint and IRS, I don’t want to speculate on what people will do, but I think it’s one of the more ridiculous comments to think you can take a real estate tax that you are required to make and dress that up as a charitable contribution,”

Mnuchin told reporters at the daily White House press briefing. “I hope that the states are more focused on cutting their budgets and giving tax cuts to their people in their states than they are in trying to evade the law.”

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Reader calls Murphy’s plan to make voluntary contributions to pay for local services a tax avoidance scheme

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In other words, Gov. Murphy wants you to participate in a transparent tax avoidance scheme that will certainly result in you getting fined out of your wazoo by the IRS. How can people justify their vote for this obvious disaster-in-advance? Christie was a complete jerk, but electing someone who will outdo Corzine, McGreevey and him and as a joke is no solution.

 

see http://theridgewoodblog.net/governor-murphy-mobilizes-mayors-to-implement-policies-providing-tax-relief-in-their-municipalities/

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Governor Murphy Mobilizes Mayors to Implement Policies Providing Tax Relief in Their Municipalities

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Renews Pledge to Preserve Tax Deductions for New Jersey

February 10,2018

the staff of the Ridgewood blog

Marlboro NJ,  in what some critics call a last act of a desperate man ,Governor Phil Murphy today called upon mayors to take steps to counteract the effects of the federal tax legislation that gutted New Jersey’s State and Local Tax (SALT) deduction and limited the amount of money state homeowners can deduct from their property taxes.

“When the disastrous federal tax legislation passed, I committed to pushing back and taking steps to ensure that the people of New Jersey are not subjected to unfair double taxation,” Governor Murphy said. “We have begun working with legislative leadership to protect our residents and prevent this plan from further hurting our taxpayers. We must eliminate any and all barriers to creating a system that will provide tax relief to property taxpayers who make charitable contributions to their municipality.”

If the system is implemented, taxpayers can make voluntary contributions to funds that pay for local services like schools, law enforcement, and infrastructure. They will then receive an offsetting tax credit on their property tax bill and contributions will be deductible for federal tax purposes under existing law.

Governor Murphy today was joined by a bipartisan group of mayors who have pledged to allow taxpayers in their towns to make payments to local governments as charitable donations and offset property tax liability. Marlboro Mayor John Hornik, Ocean Township Mayor Christopher Sciciliano, Manasquan Mayor Edward Donovan, Belmar Mayor Matt Doherty, and Aberdeen Mayor Fred Tagliarini pledged to introduce the this plan in their municipalities. They join the mayors of Fair Lawn, Paramus, and Park Ridge who made that pledge in January.

On Thursday, Governor Murphy promised to sign any legislation that reduces existing state roadblocks to municipalities reforming their property tax system to allow for charitable contributions, a system that will preserve local revenues while also providing residents with significant deductibility of their payments from their federal income taxes.