Gov. Phil Murphy is eyeing a federal tax reform workaround for New Jersey in the short term, and a long-term solution to the state’s property tax woes.
Speaking at the New Jersey Conference of Mayors event in Trenton on Thursday, Murphy urged the Legislature to put forth a bill where towns and school districts can establish charitable funds instead of collecting property taxes. Taxpayers, Murphy said, would be able to deduct those funds as charitable contributions on federal returns.
Murphy said this would be an immediate way to counter the new federal tax law that caps the limit on state and local property tax deductions at $10,000 – which he called a “gut punch” from Congress and President Trump to New Jersey.
“Certainly, this is no replacement for meaningful property tax relief,” Murphy said. “I get that. We all know that there are no easy fixes. But while we commit to the long-term effort, let’s also commit to providing common sense and immediate relief for our taxpayers.”
Murphy has already said New Jersey will join with New York and Connecticut to legally challenge the constitutionality of the new cap, and stressed to municipal leaders at the Conference of Mayors that the loss of the full state and local tax deduction will drive down home values in the Garden State.
Murphy said if towns are able to establish charitable funds that pay for local services, homeowners would get credits on their property tax bills for any amount they donate. He said 33 other states have similar programs which has the blessing of the Internal Revenue Service.
Some tax experts, however, say case law and IRS regulations generally require charitable intent for a contribution to be deductible – and that individuals should not be receiving a substantial benefit from a contribution.
Nevertheless, several municipal leaders have indicated an interest in the workaround. On Friday, Murphy was joined by five Monmouth County mayors from both sides of the aisle who pledged to allow taxpayers in their towns to make payments to local governments as charitable donations.
Assembly Republican Leader Jon Bramnick and Senate President Steve Sweeney said on Thursday the idea is worth pursuing legislatively.
Both, however, stressed that New Jersey is now at a breaking point with its tax burdens – and long-term tax reform should be the priority as the Governor prepares his first budget. In the past several weeks, Sweeney has convened a panel to study tax reform and has stated that now is not the time to implement an increased millionaires’ tax, which he previously sponsored.
“It’s not too hard to figure out,” Sweeney said. “Either you’re going to have a big hole or you’re going to have to raise a lot of taxes. I’m of the mindset that we’re not going to raise taxes.”
“The taxpayers have had enough, and I stand with them saying, ‘Let’s look at other ways to make this thing work before we go back and ask for more money.’ Because people can leave.”
Anyone who seriously thinks that this tax avoidance scheme will pass muster should see me for a a discounted deed for the Brooklyn Bridge and a free bottle of snake oil.
How about reducing the ridiculously high public employee pensions that are one of the several root cause of excessively high property taxes in NJ? Another weak politician, another band aid, while the private sector employees continue to fund and watch the public sector employees retire early and live well.
If you look at the time frame, all problems have started since Corporate America has been made stronger due to their lobbying (bribing) efforts
So Al, in the alternate universe you live in, problems with weak willed politicians who curry favor with big labor and support big government handouts are all caused by the strengthening of Corporate America through their lobbying (bribing) efforts? Please get back on your medication. NJ is a great state for the candy man who provides for the wants of all their sycophantic political followers while telling the “rich” to simply shut up and pay more. Murphy will have to swallow his big government dreams and tighten his belt or people will continue to leave this state.
KB, would be nice to hear your ideas rather than attack another person’s point of view. Play nice.
You have hit the nail on the head! When a police officer can work lots of overtime, at the end of his/her career, and then retire on a juicy pension, that’s outrageous!
Bring Teachers & Educators Benefits in line with the private sector with the number of sick days , personal days & vacation days . The private sector does not have a well that they can keep drawing from
All of the above
Everyone says we have a property tax problem and the real problem is in the school tax that makes up 80% of the property tax. Any solution for the problem needs to be on two levels. One is the proper state funding formula that is fair for all districts and should be based on the total average a district spends per pupil. For example, a school district that is operating below the state average per pupil should receive more and district operating above the state average should receive less. the second issue is caused by the first. If the school districts get more funding from the state they need to be required to filter a majority of that increased funding back as a lowering of the school tax charged to its residents.
Let’s consider abolishing home rule and work from a County level. With every municipality having their own schools and services, costs are increased. A more regional approach for all services needs to be considered.
It’s wonderful that the new Guv is teaching his constituents how to evade federal taxes so NJ can spend more money when he raises taxes again. Maybe NJ should follow California and look to leave the Union. That way he can take all your money.
Instead of these gimmicks, the Governor should work on cost reductions to lower the SALT taxes!
How about cutting out county govt altogether? this is a level of patronage we cannot afford. Virginia has no county govt. Lets use their model
If they or so worried about the cap why doesn’t NJ take off their 10% cap that has been in affect for years and also look a the rulings that the federal courts have just came out with in Road Island about their pension plan
Remember Governor , legislators , and citizens : “ There’s nothing government can give you that hasn’t taken from you in the first place.” ( W. Churchill)
One thing that Senator Sweeney and Gov Murphy can do is to reduce the state and local taxes on the retired middle class by giving the pension exclusion bill which is a bill passed in 2016 that permits a deduction on retirement income to all seniors by revising the income cap in the regulation upward.
School districts should be required to merge to save on admin costs. Public pensions should be eliminated in favor of defined contribution plans.