January 17, 2018

Leaders Make Plans To Counteract Tax Bill

By Donald Gilpin

Princeton Mayor Liz Lempert is taking a close look at a plan to counteract the loss of state and local tax deductions due to the tax bill passed by Congress last month.

Congressman Josh Gottheimer (D-5) and new Governor Phil Murphy have offered a tax cut plan for New Jersey that has the potential to restore the value of state and local tax (SALT) deductions by providing a tax credit for taxpayers who make charitable contributions to their state or local governments. Congressman Bill Pascrell (D-9) and the mayors of Fair Lawn, Paramus, and Park Ridge have also expressed support for the plan and the desire to implement it, with state support, in their communities.

According to Gottheimer’s January 5 statement, states and local governments could establish or support funds that pay for local services, including schools, law enforcement, and infrastructure. Taxpayers could make contributions to these funds and receive an offsetting tax credit.

The Republican tax bill passed last month in Congress caps deductions at $10,000 for state and local taxes, but the Gottheimer-Murphy plan would restore the benefit of additional deductions for taxpayers who itemize.

“I applaud the towns that are putting themselves out there and thinking creatively,” said Lempert. “I’m glad to see our new governor being outspoken on the issue, and I’m glad to see cooperation with California and New York and other states that are being unfairly targeted. We’re ready and willing to act when there’s a clear path on how we can best advocate for our residents.”

She continued, “We need to be thinking creatively and doing everything we can to make sure we’re being treated fairly, but I also want to proceed cautiously where we don’t encourage residents to participate in a program that is then deemed not viable.” As far as setting up a charity fund to counteract tax payments, she noted that “the jury is still out on whether that’s going to pass muster with the IRS.”

Lempert has been in communication with the New Jersey League of
Municipalities, whose lawyers have been investigating the legal basis for towns to take action. “We’re waiting for guidance from them,” she said, adding that municipalities don’t have the authority to initiate action unless that right is specified by law.

In referring to the Gottheimer-Murphy plan, she added, “In order for a town to be able to set up a structure like that you’d need to be given the authority from the state, and possibly even from the federal government.”

Other lawmakers have also weighed in on the new tax bill and New Jersey’s possible strategies to counteract it. Assemblyman Andrew Zwicker (D-16) praised the Gottheimer-Murphy plan. “That’s the kind of out-of-the-box thinking we need throughout New Jersey,” he said, “a very innovative and creative plan.” He added, “We are one of the states that is going to have the largest fallout from the new tax law. We give much more money to the federal government than we get in return, and this new tax law will make it worse.”

A physicist and head of science education at the Princeton University Plasma Physics Laboratory, Zwicker, who was just appointed chair of the new Science, Innovation, and Technology Committee of the General Assembly, expressed his enthusiasm about working with the new administration in Trenton. His committee is slated to take the lead in focusing on science and innovation as a source of jobs and economic development in the state.

Congresswoman Bonnie Watson Coleman (D-12), also eager to support strategies to help New Jersey taxpayers, did not hesitate to criticize the new Trump administration-Republican tax bill and its consequences.

“My colleagues and I would not be scrambling for solutions if it weren’t for Donald Trump and his allies ramming through this ill-conceived and poorly crafted tax bill,” she said. “No piece of legislation that adds trillions of dollars to the deficit and impacts the finances of every household nationwide should be considered so thoughtlessly. Each day information surfaces — often conflicting — on how New Jersey taxpayers can adjust to this new tax system.”

She added, “That said, New Jerseyans are rightfully looking to leadership for a plan of action, and I am committed to working with the New Jersey delegation and the incoming Murphy administration to develop and pursue the best steps forward to manage some of the consequences of this terrible bill.”

Murphy Administration

Lempert also mentioned her enthusiasm for the new administration in state government. “I’m very excited we have new leadership in Trenton,” she said. “It can only mean better things for our state and for Princeton. I’m looking forward to having more partners in Trenton to work with on issues that are important for us and our residents.”

She pointed out that Princeton is well represented in Trenton. “I’m excited just in terms of looking at the transition team the governor has put together and the people he’s surrounding himself with.”

Emphasizing transportation and sustainability as two of the most important issues she’s optimistic about addressing with the new administration, Lempert continued, “Princeton has been directly impacted by the lack of attention, funding, and stewardship for New Jersey Transit and our transit infrastructure. I’m hopeful that we’ll see more of a partnership there and the resources to allow New Jersey Transit to do its job.”

She also mentioned that she is looking forward to exploring with state partnership the conversion of street lights to LEDs. “We need help from the state on that because the rates that PSE&G charges are essentially determined by the state, and if there’s no acknowledgment of reduced costs and increased savings for LEDs then there’s a lack of incentive there. I’m hoping we can work with the administration on that to achieve significant savings. There are going to be other projects like that where the state can serve as the entity that helps to regulate using green infrastructure for building and other developments we’re doing.”