Rep. Malinowski Advocates for Full Restoration of the State and Local Tax Deduction

Press Release

Today, Representative Tom Malinowski testified before the House Ways and Means Committee on the importance of restoring the full SALT Deduction for NJ residents. Find a transcript of his remarks below and a video here.

"Thank you so, so much for holding this hearing and for having me. I'd like to use my time today on behalf of the 7th district of New Jersey to urge reinstating the full State and Local Tax deduction.

As you know, last Congress we passed the bipartisan Restoring Tax Fairness for States and Localities Act to eliminate the SALT cap. And thank you again so much for your support in that effort. Unfortunately, the Senate Majority Leader buried that legislation in his legislative graveyard. So, this year, as some of the tax cuts from the 2017 tax bill begin to expire, we have a chance to right this wrong. To put it succinctly, any tax reform package this body takes up must include a restoration of the SALT deduction. The pandemic and the economic crisis make that request all the more urgent.

Now, in my district over 53% of taxpayers took the SALT deduction when it was last available. The typical family in New Jersey lost around $9,000 in deductions due to the cap. In my district, the number is $16,000. How do we defend that? One argument that's been made is that these are mostly wealthy taxpayers, and that's simply not true. In New Jersey, they're teachers, they're firefighters, they're small business owners, they're young families who are purchasing their first homes, seniors who want to retire in theirs.

According to our Society of Certified Public Accountants in New Jersey, more than 60% of their individual and family clients making under $200,000 a year were affected by the cap. How do we justify this when so many others who are actually wealthy benefited so much from the 2017 tax bill? How do we defend it when the effective corporate tax rate in America has dropped to 12% as a result of that bill? When large, profitable corporations like Zoom report paying absolutely no taxes?

There's another argument made, and this is one of the hardest of all for my constituents to stomach, and that is that the SALT deduction is some kind of special subsidy for high tax states. One that taxpayers in other states shouldn't have to pay. Well, the reality is that the states hardest hit by the SALT cap are also the states that give the most to our federal budget while getting the least back. Depending on what estimates you choose, New Jersey gets between 79 and 91 cents back from the federal government for every dollar we send in taxes. And these days of massive deficit spending, there is no federal deficit from the point of view of New Jersey.

Now, we don't mind helping kids in other states get a better education or helping folks around the country get better healthcare or contributing to our national defense by supporting bases in the South or West, because, after all we are one country, we are all Americans. We all benefit from those things. But what my middle class constituents do mind is politicians from those states then taking away one of the only benefits we got in the federal tax code and then trying to justify it with the argument that they don't want to subsidize us.

Now, finally, I just want everyone to think about what our state and local taxes support. In New Jersey, they mostly support education for our kids. We make these contributions -- that's what they are, contributions -- to ensure that every child in our communities has an equal chance to succeed. And now those contributions are being taxed. Everybody gets hurt by that. In my state and all around the country. Not just the people who lost their deductions.

Mr. Chairman, at every public event I hold in my district, no matter the topic, no matter how urgent the crisis we are currently facing with COVID, my constituents continue to ask me about restoring the SALT deduction. They want to know when Congress will fix this injustice. So, I implore the committee to make it a priority in this Congress to restore the deduction, to lift the cap, provide real relief to middle class taxpayers in my district and across the country.

Thank you again so very much, I yield back."

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