OMBUDSMAN ALERT: New York & New Jersey explore treating property taxes as charitable deductions to avoid the federal cap on deductions

By Dr. Louis Alpert

Just last week, on February 22, 2018, Ombudsman-Alert discussed the bi-partisan federal legislation introduced by congresspersons Nita Lowey and Peter King to completely restore the SALT deductions, which was limited to 10K, in the new federal tax code, to begin in the tax year 2018!

While this writer will continue to actively support this important legislation in the US congress as outlined in last week’s column, it’s also critical to explore these back-up measures, which could achieve the same results if it survives possible legal challenges by the federal government. These back-up measures have also been embraced by other states in addition to New York and New Jersey.

If successful, these back-up measures were especially designed to provide some possible insurance in the event that the federal legislation proves unsuccessful or is overturned by the president.

Upon this Ombudsman’s request, the following statements, supporting these back-up measures, were submitted by State Senator David Carlucci and State Assemblyman Kenneth Zebrowski:

Senator Carlucci:

“No stone should be left unturned when looking to reduce the property tax burden for Rockland and Westchester residents. We have to fight off this economic attack by President Trump when the majority of people in Rockland and Westchester pay more than $10,000 in property taxes. I support the Governor’s Charitable Contribution Funds for health care and education. They would allow taxpayers who itemize deductions to claim these charitable contributions as deductions on their Federal and State tax returns. “

Assemblyman Zebrowski:

“New York State is actively evaluating proposals to respond to the Federal Tax Plan’s limitation on SALT deductions. The governor has two proposals in his budget submission. One would allow companies to switch to a payroll tax instead of an income tax. The other would set up a charitable contribution system for school and municipal taxes. The legislature is collaborating with the governor’s office to determine if these proposals are feasible in assisting NY taxpayers.”

In closing, it’s most instructive to point out to our readers that our neighboring state of  New Jersey is somewhat ahead of us in planning to “protect” their SALT deductions using charitable deductions in lieu of state and local taxes. It’s of interest to note that the NJ municipalities of Park Ridge, Fairlawn and Paramus plan to participate in this venture. Their position may be summarized as follows:

“Towns create charitable funds and give homeowners a credit off their property taxes for all or most of what they donate. The towns would use the donations for the same purposes as property taxes, such as schools and police and snowplows.”

Perhaps Rockland’s towns would consider using this as a guide in helping their residents “protect” their SALT deductions if the federal efforts taken by Nita Lowey and Peter King prove unsuccessful.

Please address all comments and questions to [email protected].

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