TRENTON — Burlington County’s two senators will serve on a special task force that has been created to examine New Jersey’s tax structures and government operations in the wake of the new federal tax law and its cap on the state and local tax deduction.
Sens. Dawn Marie Addiego, R-8th of Evesham, and Troy Singleton, D-7th of Palmyra, were among the seven legislators appointed to the Economic and Fiscal Policy Working Group by Senate President Stephen Sweeney, D-3rd of West Deptford.
They will join with 16 finance, tax and policy experts who were also asked to join the group, which will be led by Sens. Paul Sarlo, D-36th of Wood-Ridge; Steve Oroho, R-24th of Franklin; and Assembly Majority Leader Lou Greenwald, D-6th of Voorhees.
Among the other group members are former Sen. Ray Lesniak and former state Treasurer Feather O’Connor Houston.
The group has been charged with looking at New Jersey’s government and taxes at all levels to assess its efficiency, fairness and competitiveness. The group will also be asked to examine the new federal tax law and its expected impact on taxpayers and the state’s economy.
The sweeping tax law was approved by Congress with no Democratic support before being signed by President Donald Trump in December. Among the changes are a greatly reduced corporate tax rate, lower individual rates, and an enhanced standard deduction and child credit. But it has come under fire in New Jersey and other high-taxed states due to its $10,000 cap on the state and local taxes deduction, also known as SALT.
The deduction is claimed by close to 40 percent of New Jersey taxpayers and allows them to write off their property taxes and state income tax on their federal returns. Critics fear that capping it will hurt New Jersey’s economy and home values, and that it could also force some of taxpayers to pay more in federal taxes.
“We need to know how we can mitigate the negative impact of the federal tax plan and undertake a long-overdue examination of the adequacy, fairness and competitiveness of our tax structure,” Sweeney said in a statement. “We want to make sure that government spending is efficient and effective so that we maximize the impact and minimize the costs.”
The group will examine the state and local tax system, including New Jersey’s notoriously high property taxes and methods to control them, as well as topics such as county school districts, regionalizing school districts, the causes and extent of out-migration of residents from the state, and best practices for delivery of government services, Sarlo said.
“Everything is going to be on the table,” Sarlo said. “We’re going to look at the property tax impact. We’re going to look at what the feds are doing to us. We’re going to look at education funding. And we’re going to engage experts — independent experts.”
The group will meet in private. No timetable has been announced as to when it will release its findings or recommendations.
Gov. Phil Murphy is expected to deliver his administration’s first budget for the fiscal year next month.
During his successful campaign, Murphy said he would press lawmakers to increase the state income tax on earnings over $1 million, as well as close tax loopholes used by large corporations or hedge funds to avoid paying New Jersey taxes. He said the extra revenue could be used to increase funding for public schools and increase the state’s payments into the public employee pension systems.
Sweeney had endorsed the so-called “millionaires’ tax” as a way to boost school funding, but he said he has reconsidered in the wake of the federal tax law and its new limit on the state and local tax deduction.
Earlier this month, he described raising the income tax as the “absolutely last resort.”
Murphy has been among the most vocal critics of the tax law and ordered the state to join with New York and Connecticut in a legal challenge of its SALT cap. He has also called for New Jersey towns, school districts and counties to create charitable funds and tax credits that residents can contribute to in lieu of property taxes as a workaround to the new law.
But he has said he is still in favor of a millionaires’ tax.
Greenwald said the working group’s examination would not become an “academic exercise” that collects dust and is never implemented.
“We know that this is no small task and that it means confronting real fiscal and political challenges,” he said. “But this is not an academic exercise. We are committed to championing the tough measures needed to make New Jersey competitive, affordable and economically strong.”