Murphy urges mayors to try tax law loophole

For a huddle of Monmouth County mayors, it probably feels like throwing a Hail Mary pass. But their residents pay such back-breaking property taxes, they’re willing to try dodging the onerous Trump tax law that caps so-called SALT, state and local tax deductions, at just $10,000.

“We were elected to advocate for our residents, our citizens, that’s what we’re here to do. So to me, this is just another advocacy that we can do for them with this tax issue. How can we solve this? There’s no magic bullet, but we have to be willing to try something, anything!” said the mayor of Ocean Township Christopher Siciliano.

Originally proposed by Rep. Josh Gottheimer and championed by Gov. Murphy, the loophole would let homeowners pay their local property taxes as fully deductible charitable contributions to their towns. Paramus, Fair Lawn and Park Ridge committed to give it a try. Murphy says 33 other states have similar workarounds.

“New Jersey can become the 34th state. Municipalities have the ability to create these separate, charitable funds, to preserve vital services and to have contributions directed into those funds offset a homeowner’s property tax liability. These contributions would remain deductible from federal taxes and separate from the SALT deduction,” said Gov. Murphy.

It sounds tricky, but town recreation programs and libraries get donations all the time, as one mayor pointed out.

“And when I looked up libraries, IRS is already allowing contributions to libraries. So what’s the difference, if it comes from taxation or someone is a friend of a library and makes a contribution? I think it’s going to fly,” said Mayor Fred Tagliarini of Aberdeen Township.

“We’re looking for legislation from the state, and guidance, exactly how to do this the right way, so that our taxpayers are able to take advantage of the IRS regulations that permit this,” said Belmar mayor Matt Doherty.

“Why would the IRS or a court allow you to do that? It seems counter to what their intentions are,” said Jersey City Mayor Steven Fulop.

Mayor Fulop says he hopes it works, but Jersey City will wait to see how the IRS reacts.

“People file, with the expectation they can take a deduction and then the courts or IRS say, no this is not how it’s going to work. Then you’ve created this IRS accounting mess the person has to unravel and it’s caused by bad policy or the city,” said Fulop.

Murphy called on New Jersey’s Legislature to pass a bill that helps towns set up charitable funds for taxpayers to use. A miffed Senate President Steve Sweeney said Thursday they’re already working on it and that Murphy should call him.

“The most important thing Senator Sweeney said yesterday, which I think is great, and we’re talking to him and his team every day, is that we’re all together on this,” said Murphy.

The mayors say they want to get this workaround up and running for their next fiscal year, so it’s on a fast track.