How Much Will N.J. Federal Taxes Rise Under Trump-Backed Bill? It's A Big Number

WASHINGTON -- New Jersey taxpayers, who already send $31 billion more to the federal government than they receive in services, would see their federal income taxes rise by another $137 million under the House Republican tax bill, according to a new study.

Only three other states, New York, California and Maryland, would see their overall tax burden rise despite legislation designed to reduce taxes on businesses and individuals, according to the Institute on Taxation and Economic Policy, a progressive research group in Washington.

"Every report that I have seen over the last month indicates that the Republican bill is not going to be good for New Jersey," said Rep. Bill Pascrell Jr., D-9th Dist., a member of the tax-writing House Ways and Means Committee. "All in all, this is a bad bill and every report that has come out indicates how bad it is."

The four states combined would pay $16.7 billion in additional taxes. The other 46 states would get a $101.5 billion tax cut.

Meanwhile, almost one-third of the reduction, $31.2 billion would flow to just two states: Texas, home of Ways and Means Committee Chairman Kevin Brady, and Florida.

The House Republican tax plan would exacerbate a disparity between high-tax states that send billions more to Washington than they receive in services, and states that can keep their taxes low because they getting more in federal funds.

New Jersey, for example, gets 74 cents back for every $1 in federal taxes, lowest among the 50 states, according to the State University of New York's Rockefeller Institute of Government. New York is second with 81 cents.

Florida gets $1.22 back. Texas almost breaks even at 98 cents.

The study was released as House Republicans prepared for a Thursday vote on their tax plan, which would increase the federal deficit by $1.5 trillion over 10 years.

It blames the tax hike on the fact that residents of the four states are among the heaviest users of the federal deduction for state and local taxes. The House Republican bill would eliminate the break for all but $10,000 in property taxes in order to fund lower income tax rates for individuals and corporations.

More than four in 10 New Jersey taxpayers take the state and local tax deduction, behind only Maryland and Connecticut, according to the Tax Foundation. New York and California also are among the top 10.

As a result, the number of New Jersey residents with enough deductions to itemize rather than take an increased standard deduction of $24,000 would decline by 60 percent to 658,000 from 1.6 million, essentially making the property tax break worthless, according to New Jersey Policy Perspective, a progressive research group.

In addition, the $11,300 increase in the standard deduction for a family of three from the current $12,700 would be cancelled out by the loss of the $4,050 per person exemption. A $300 per person tax credit designed to replace the personal exemption would expire in five years.

White House Budget Director Mick Mulvaney said that residents of low-tax states shouldn't be paying more in federal taxes because they can't take advantage of the same deduction as residents of high-tax states.

"You can make an argument that it's not fair, it's not right, that the folks who live in the low-tax jurisdictions are actually subsidizing" high-tax states, Mulvaney told reporters from local news outlets, including NJ Advance Media.

Mulvaney's home state of South Carolina, however, gets back $1.71 for every $1 paid in federal taxes, more than twice as much as New Jersey does, according to the Rockefeller Institute study.

"The system is not set up so that states get back the same amount of money they put in," Mulvaney said.

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