Citing the inclusion of a provision that would eliminate state and local tax (SALT) deductions as part of tax reform, U.S. Reps. Dan Donovan and Lee Zeldin, Republicans representing New York, joined New Jersey Republican Rep. Leonard Lance in voting against a budget resolution last week.
The Senate added the SALT provision to an amendment to the fiscal year 2018 budget document that lays the groundwork for tax reform, H. Con. Res. 71, that was not included in the original House version. The House gave final approval to the budget resolution on Thursday after the Senate approved the measure on Oct. 19.
Currently, taxpayers can deduct real estate taxes, sales taxes and income taxes paid to state and local governments from their federal tax bills.
“I stand with the majority of my colleagues in New York’s Republican delegation in opposing the budget because it calls for the elimination of the state and local tax deduction,” Donovan said. “I support the tax reform effort because overburdened families deserve tax relief so they can keep more of their hard-earned money, but I can’t support legislation that forces my constituents to pay for tax cuts elsewhere in the country. New York City already contributes billions more in tax revenues than it gets back from the federal government.”
While Donovan, a member of the House Homeland Security and Foreign Affairs committees, said he was hopeful a resolution could be negotiated, “… the language in the budget resolution is a poison pill that I just can’t swallow.”
Lance called the provision singling out SALT for elimination “egregious.” He said its inclusion undermines ongoing efforts to negotiate improvements to the tax reform plan.
“I want tax reform,” said Lance, who serves on the House Energy and Commerce Committee. “I want to lower the corporate rate so the United States can be competitive in the world and I want lower taxes on individuals and small businesses. But New Jersey sends more than enough money to Washington, and I cannot support a plan financed on the backs of New Jerseyans. I will not ease up in my determination to address this flaw in the plan.”
Zeldin said his goal in tax reform is to allow Long Islanders to keep more of their paycheck, to reduce their cost of living and to help them save for retirement. He voted against the budget resolution because a workable solution has not been identified for the SALT issue.
“On another front, the state and local elected officials responsible for making our state such a high tax state really need to do their part to reduce the tax burden from their end as well, because it is out of control,” Zeldin said. “Our state and local tax deduction with the feds is so high, because our state and local taxes are so high.”
“New Yorkers and all Americans need tax relief from all levels of government,” said Zeldin, a member of the House Financial Services and Foreign Affairs committees.