Congress could restore your property tax relief with this new proposal, sources say
A two-year repeal of the Republican tax law’s $ 10,000 cap on how much people deduct from state and local income taxes has emerged as the main proposal to restore at least part of a tax relief. property tax that has a big impact on New Jersey, two sources involved in the negotiations told NJ Advance Media.
The provision would be added to the Democrats’ $ 3.5 trillion spending bill, which is now making its way through Congress, according to the individuals, speaking on condition of anonymity as a deal has yet to be reached.
Congressional Democrats are seeking to secure the deal on the larger spending bill, without which several progressive lawmakers have said they would vote against the separate $ 1,000 billion bipartisan infrastructure measure, which includes l money to be raised to build the much sought-after Gateway Tunnel under the Hudson River. .
The cap has disproportionately affected New Jersey and other high-tax states, most of which send billions more to Washington than they receive in services.
Lawmakers in those states have threatened to oppose any spending bill that does not address the deduction limit. They have enough votes to kill the legislation that is being considered as part of a parliamentary maneuver known as reconciliation, which prevents Republican obstruction in the Senate and allows the Democratic Congress to pass the bill by majority vote.
Republicans decried the national and local tax deduction as a gift to the wealthy. However, they also introduced a law to repeal the inheritance tax which only hits people with assets over $ 11 million, none of them are family farms or small businesses.
The Joint Committee on Taxation found that 66% of those who used the tax break in 2019 earned less than $ 200,000, although a full repeal would give 61% of the benefits to those who earn more than $ 200,000.
The GOP tax law gave 52% of its benefits to those earning at least $ 216,800, according to the Tax Policy Center, a research group.
The House Ways and Means Committee has excluded the provision from the tax changes it drafted, but it could be added when the House Rules Committee considers the bill, currently the subject of negotiations between Democrats. of the House and the Senate.
If the two-year repeal is approved, lawmakers would have to revisit the cap once more before it automatically expires in 2025, with all other provisions benefiting low- and middle-income Americans, unless a future Congress does not vote to extend them. However, the corporate tax cuts have been made permanent. As a result, 83% of the bill’s benefits would go to the top 1% by 2027, according to the Tax Policy Center.
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