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Is the Cap on the SALT Deduction in Play ?

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the staff of the Ridgewood blog

Ridgewood NJ, Biden promised he would repeal the $10,000 cap on the state and local tax (SALT) deduction but limit the tax benefit of all itemized deductions to 28 percent. Further, he would tax capital gains and dividends as ordinary income for taxpayers who report $1 million or more and tax capital gains at death, subject to certain exclusions.
Continue reading Is the Cap on the SALT Deduction in Play ?

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Reader Endorses Frank Pallotta in the July 7th Republican Primary

Republican Candidate for Congress Frank Pallotta

Dear Editor,

I am writing to express my support for Frank Pallotta in the July 7th Republican Primary.  I have had the opportunity to get to know Frank over the last few years and am quite impressed.  He is a no-nonsense guy that listens to people, applies common sense solutions to the problems facing NJ-5, including high taxation, SALT, high-density overdevelopment amongst others.

Continue reading Reader Endorses Frank Pallotta in the July 7th Republican Primary

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Wealthy Primary Beneficiaries of SALT Tax deduction

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the staff of the Ridgewood blog

Ridgewood NJ, You may hear some of New Jersey’s representatives in Washington talking about how the “Middle Class” would benefit from a repeal of the SALT deduction cap.

And then there’s reality. A chart made by Congressman Josh Gottheimer tells the story he probably doesn’t want you to know.

The largest beneficiaries , the rich.

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U.S. District Judge throws out lawsuit over the SALT Tax-Cap Challenge filed by New York, New Jersey, Connecticut and Maryland

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the staff of the Ridgewood blog

Wyckoff NJ, After a federal ruling yesterday dismissed cases to rescind the $10,000 cap on state and local tax deductions, Assemblyman Christopher DePhillips said that if Governor Murphy and Democrats were sincere about eliminating the cap on state and local taxes, then they should do it in New Jersey.

“Republicans tried to eliminate New Jersey’s cap on property tax deduction multiple times, and the Democrat majority voted to maintain higher taxes in each instance for no other reason than it was proposed by Republicans and it would keep up the fight against Trump,” said DePhillips (R-Bergen). “They obviously must not disagree on the substance of the policy if they are criticizing the federal law, which was based on New Jersey’s cap. It is completely hypocritical. If they don’t want a cap, then eliminate the one at home.”

Continue reading U.S. District Judge throws out lawsuit over the SALT Tax-Cap Challenge filed by New York, New Jersey, Connecticut and Maryland
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Governor Murphy’s lawsuit against the Internal Revenue Service is a waste of state resources and taxpayer money

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the staff of the Ridgewood blog

Trenton NJ, Senator Joe Pennacchio criticized Governor Murphy’s lawsuit against the Internal Revenue Service, claiming it is a waste of state resources and taxpayer money.

“The Murphy Administration is lawsuit happy,” said Pennacchio (R-26). “The Governor should not be using New Jersey taxpayer dollars to play politics. Rather than fighting with the federal government, I urge Governor Murphy to focus on genuine and immediate tax solutions that we have the power as state lawmakers to advance.”

Continue reading Governor Murphy’s lawsuit against the Internal Revenue Service is a waste of state resources and taxpayer money
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Governor’s IRS Lawsuit Does Not Solve State’s High Tax Problem

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the staff of the Ridgewood blog

Trenton NJ, Senator Steven Oroho said that a lawsuit announced today by Governor Phil Murphy and Attorney General Gurbir Grewal against the Internal Revenue Service amounts to window dressing and won’t provide meaningful, long-term property tax relief to New Jersey families.

“New Jersey homeowners are the most overtaxed residents in the United States,” Oroho said. “The lawsuit announced today does very little to address that. The better approach would be to fix the state’s underlying tax problems that make the SALT limitation an issue. Governor Murphy can help make the Garden State more competitive and accomplish real savings for taxpayers by getting behind the Path to Progress reforms that have bipartisan support in the Legislature.”

Continue reading Governor’s IRS Lawsuit Does Not Solve State’s High Tax Problem
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Senator Joe Pennacchio (R-26) : We told you that the IRS Wouldn’t Fall for Your SALT Workaround Scheme

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the staff of the Ridgewood blog

Trenton NJ, In response to the news that the IRS has denied attempts by New Jersey and New York to circumvent the federal cap on SALT deductions, Senator Joe Pennacchio chastised Democrats for wasting taxpayer time and resources on a workaround that never had any chance of succeeding.

On Tuesday, the IRS issued final regulations prohibiting governments from doling out tax credits in exchange for charitable contributions – effectively negating the legislation advanced in the spring of 2018, despite the objections of legislators such as Senator Pennacchio, who warned that the IRS would take action.

Continue reading Senator Joe Pennacchio (R-26) : We told you that the IRS Wouldn’t Fall for Your SALT Workaround Scheme
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Assemblywomen sets the governor straight on property taxes, SALT deductions and irresponsible spending

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the staff of the Ridgewood blog

River Vale NJ, Assemblywomen Holly Schepisi sets the governor straight on property taxes, SALT deductions and irresponsible spending in the state of New Jersey .

Schepisi said on Facebook ,” I have a novel idea, why don’t we retain some of the top tax advisors, tax attorneys and CPAs in the country to rewrite NJ’s tax code to lessen our property tax burden while figuring out a better way to fund our schools and take advantage of the new federal tax code? We spend millions fighting Trump’s policies, why don’t we invest those monies into making our own tax situation a little more tolerable. Cut spending where we can, revise our property taxes and actually help our middle class.”

Continue reading Assemblywomen sets the governor straight on property taxes, SALT deductions and irresponsible spending
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With new SALT limit, IRS explains tax treatment of state and local tax refunds

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the staff of the Ridgewood blog from the IRS website

WASHINGTON DC, The Internal Revenue Service today clarified the tax treatment of state and local tax refunds arising from any year in which the new limit on the state and local tax (SALT) deduction is in effect.

In Revenue Ruling 2019-11 (PDF), posted today on IRS.gov, the IRS provided four examples illustrating how the long-standing tax benefit rule interacts with the new SALT limit to determine the portion of any state or local tax refund that must be included on the taxpayer’s federal income tax return. Today’s announcement does not affect state tax refunds received in 2018 for tax returns currently being filed.

Continue reading With new SALT limit, IRS explains tax treatment of state and local tax refunds
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Readers Point Out the Obvious About Ridgewood and New Jersey Taxes

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file photo by Boyd Loving

“With the declining tax base, who is going to pay for all of these excessive salaries and benefits (platinum health care, very generous pension & unused sick leave payouts) negotiated in bad faith by the public sector unions ?”

“States with lower state & local taxes make much more sense for businesses to invest given the SALT deduction limits of $10,000 on their employees hurt them in high tax states like NJ.”

“The average residential property tax in Ridgewood is actually now $18,000 as of 2018/19 tax year… just as state & local tax deductions are limited to $10,000. What are the BOE and Village Council doing to help Ridgewood families keep food on their tables and gas in their cars given higher commuter pass costs, tolls, higher parking permit fees, higher Graydon and tennis pass fees, etc? And where are the vaunted schools & Village services those taxes are paying for ? In the tank.”

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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

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“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.