Scotch Plains Council Calls for Repeal of $10,000 Federal Cap on Property Tax Deductions
SCOTCH PLAINS – May 19, 2021 – The Township Council unanimously adopted a resolution on May 18 calling for federal lawmakers to immediately repeal a $10,000 federal cap on deductions for “SALT,” an acronym for state and local taxes.
In 2017, the federal government modified its tax code, no longer allowing property taxpayers to have full deductibility of their property taxes as part of federal tax filings. This decision hit towns like Scotch Plains particularly hard, as many property owners pay more than $10,000 each year.
“In all forms, the government’s decision created an unfair burden on the people of Scotch Plains,” said Councilman Matt Adams, who pushed for the resolution. “But we’re not asking for special favors as the SALT deduction does not unfairly benefit taxpayers in New Jersey or other high-tax states. To the contrary, low tax states are generally more dependent on the federal government, receiving more in federal funding than they pay to Washington.”
Adams noted the full deduction of state and local taxes has been part of the federal tax code for more than 100 years. In fact, in 1913, the first federal income tax form allowed taxpayers to deduct state and local taxes - one of only six deductions allowed at the time.
“By capping the deductibility of state and local taxes at $10,000 in 2017, the federal government is forcing double taxation on many residents in Scotch Plains,” Mayor Josh Losardo said. “In fact, this unfair cap is an attack on all communities, creating more burden. We all rely on tax payments to support public services, such as K-12 schools, law enforcement and public safety, transportation and infrastructure, and vital community and public health services.”
The Township Council is voicing its support for legislation sponsored by Rep. Bill Pascrell (D-9th Dist.), H.R. 946, which has been called the “Stop the Attack on Local Taxpayers (SALT) Act.” The bill would eliminate the $10,000 cap on property tax deduction and retroactively removes the cap, a benefit to all Americans, at all income levels.
Adams noted this deduction is especially critical for middle-income homeowners, as 50% of the deductions claimed by taxpayers earning $50,000 to $100,000 are for property taxes.
He also noted that many homeowners of relatively modest means have been hurt by the cap because it has reduced the market value of their homes. Before the SALT cap, being able to deduct property taxes made homes more affordable and helped boost values above where they would have otherwise been. When the deduction vanished, the opposite happened.
Copies of the resolution have been sent to President Joe Biden as well as all members of New Jersey’s Congressional delegation, urging action.