Calls SALT Compromise, “not my idea of how you make a deal.”
WASHINGTON, D.C. – (RealEstateRama) — U.S. Senator Bob Menendez (D-N.J.), a senior member of the Senate Finance Committee, today held a conference call with NJ Realtors to explain the many problems with the Republican tax bill and the harmful impact it could have on New Jersey homeowners and the housing market.
Among other issues, Sen. Menendez addressed the news that the Republican compromise tax bill may have a $10,000 cap on SALT deductions as a compromise with Republicans from California, New York and New Jersey.
“On this $10,000 cap,” Sen. Menendez said, “I have to be honest with you: when you get billions stolen away from you, and then you get pittance in return, it’s not my idea of how you make a deal.”
“Repealing salt and local tax deductibility as a way to raise revenue is so harmful for New Jersey. We all know how important this deduction is to making New Jersey a great place to live. It allows our state and local governments to support investments in infrastructure, public safety, education, and homeownership, and just as important, it ensures that families in New Jersey aren’t double taxed,” said Sen. Menendez. “In 2015, more than 1.5 million New Jersey homeowners with sky-high property taxes deducted nearly $15 billion from their federal tax bills. Slashing this deduction would mean higher taxes for families in New Jersey.”
Sen. Menendez recognized that stopping the bill from becoming law is an uphill battle, since Republicans are trying to ram it through before Christmas, but he strongly encouraged the entire New Jersey delegation to oppose the bill. He also called on NJ Realtors to continue their action in encouraging Congress to protect middle class homeowners.
During the Q&A, Sen. Menendez said if the bill were to pass, he vowed to fight over the next few years to repeal provisions that hurt New Jersey families.
You can read Sen. Menendez’s opening remarks, as prepared, below:
“First, let me say thank you for joining me on the call today. We have a long and successful history working together on behalf of New Jersey homeowners. Whether we are fighting to protect homeowners from flooding, ensuring a stable and strong housing market, or shielding New Jerseyans from harmful tax changes, we are successful because we work together on behalf of our communities.
“Quite simply, the proposals outlined in both the House and Senate tax bills treat New Jersey unfairly. Taken together, the mortgage interest, capital gains, and state and local tax deductibility provisions would undercut middle class families in New Jersey and undermine our housing market.
“By sparking a decline in housing values, making it harder for families to buy their first homes or upgrade to a new home, and taking money out of the pockets of homeowners, this is a bad deal for New Jersey.
“Let me be clear I have always believed that our tax code needs simplification, and that’s why I am on the Senate Finance Committee, and why I’m proud to be appointed to the Conference Committee. I want to get into the details to reform the code so that it works better. But it has to work better for New Jersey and these bills simply fail to meet that requirement.
“As you all know, the House bill proposed lowering the cap on mortgage interest deduction from $1 million to $500,000. More than 23 percent of homes with a mortgage in New Jersey have a value higher than $500,000. That percentage is as high as 36 and 37 percent when you look at communities in northern New Jersey.
“So as a result of this lower cap, homes with mortgages that have values above $500,000 will see an immediate drop in value, because the lower cap will apply when the home is sold, depriving the new buyer of the $1 million interest deduction. With less mortgage interest deduction availability, the marginal cost of properties will go up ultimately decreasing the value.
Now, there are media reports indicating that the final bill might drop the mortgage interest cap down to $750,000, and while this is better than a $500,000 cap, it’s still a step in the wrong direction.
“And it doesn’t end there. The tax bills would unfairly penalize homeowners who remain in their homes for less than five years, prohibiting them from excluding capital gains on the sales of their homes. More than 10 percent of owners in New Jersey have lived in their homes for 2-4 years, and as a result of the capital gains provision, they will no longer be able to take the exemption.
“Last but not least, repealing salt and local tax deductibility as a way to raise revenue is so harmful for New Jersey. We all know how important this deduction is to making New Jersey a great place to live. It allows our state and local governments to support investments in infrastructure, public safety, education, and homeownership, and just as important, it ensures that families in New Jersey aren’t taxed doubly.
“In 2015, more than 1.5 million New Jersey homeowners with sky-high property taxes deducted nearly $15 billion from their federal tax bills. Slashing this deduction would mean higher taxes for families in New Jersey.
“I’m fighting in the conference committee to protect New Jersey, but I’d be lying if I said it wasn’t an uphill battle. Here’s what I know—your voices are powerful, and I’ve heard from thousands of realtors across the state. In my view, there’s simply no reason for any member of the New Jersey congressional delegation to support the bill, so it is important for you all to continue doing what you’re doing.”
Steven_Sandberg (at) menendez.senate (dot) gov