By The Staff
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Are you supposed to want to soak the rich? Or not?
New Jerseyans can’t help but be a little confused, especially after hearing Democrats complain throughout the 2018 midterm cycle about how changes to the federal SALT (state and local tax) deduction through the Tax Cuts and Jobs Act would impact New Jersey.
But who really benefits the most if the new $10,000 cap is rolled back? According to a recent analysis by the D.C.-based Tax Foundation, scrapping the SALT deduction cap would help the top 20% of taxpayers and very few others. In fact, the biggest winners would be in the fabled top 1% of federal taxpayers.
Not that it was all bad.
“The TCJA broadened the tax base by limiting the amount individuals could deduct in state and local taxes to $10,000. For high-income taxpayers, this cap increased federal taxable income. By itself, this provision would increase federal tax liability,” explained the Tax Foundation’s Kyle Pomerleau. “However, high-income taxpayers also received offsetting tax cuts, such as lower statutory tax rates, a much larger Alternative Minimum Tax Exemption, and a reduction in the corporate income tax. On net, these taxpayers tended to have a lower liability under current law, even with the capped SALT deduction.”
But…
“We estimate that eliminating the SALT deduction cap would have no impact on taxpayers in the bottom two income quintiles and a negligible impact on taxpayers in the third and fourth quintiles. These taxpayers currently benefit from the new large standard deduction. However, taxpayers in the top 5 and 1 percent of income earners would see an increase in after-tax income of 1.25 percent and 2.79 percent respectively,” Pomerleau added.
Our own Save Jersey founder Matt Rooney raised this issue back in July 2018 when the well-heeled Governor Phil Murphy (who estimated to be worth hundreds of millions of dollars in his own right) moved to sue the federal government over the SALT cap:
I’m not a class warfare guy. I support people keeping as much of their own, hard-earned money as possible after the roads and military are adequately funded. But if we’re going to think and act like good little social justice warriors, then it’s worth remembering that while most New Jerseyans got a tax cut courtesy of President Trump and the GOP Congress, the “rich” stand the most to gain if the SALT cap goes away. It would steer something like 57% of of the benefits back to the so-called 1%.
The Democrat Governor’s property taxes alone are reportedly over $200,000.
Some quick math: $204,361 minus 10,000 equals the “full” pre-federal reform SALT deduction Murphy is currently missing out on. At a 39.6% top marginal rate? He could save almost eighty grand ($76,966.95) if he wins in court. In perpetuity! And that’s based only on what we know.
So com’on, Mr. Governor. Let’s see how much cash YOU will recoup if your lawsuit — funded by OUR tax dollars — prevails. Remember: Murphy took his taxpayer-funded salary, too, notwithstanding his frequent preaching about the need for people like him to fork over more cash.
You and I have skin in this game, Save Jerseyans, even if Phil Murphy and his rich, limousine liberal friends feign an air of selflessness which I suspect we could easily and definitively disprove with a little transparency.
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N.J. Democrats want us to hate the rich.
So why are they trying to help them?
Don’t they want the rich to pay more? Their “fair” share? Or only other states’ rich people?
Yes, socialism can be confusing. Very confusing, and by confusing, we mean non-sensical.
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