New Jersey is leading high-cost states in working to find a way around caps on property tax breaks, Politico reports.
Democrats in the state argue that a loophole in the Republican tax bill allows homeowners to deduct their property taxes if they create and donate to a charitable fund, which they can use as a credit towards their property taxes.
State Sens. Paul Sarlo and Stephen Sweeney, both Democrats, have introduced a bill to allow municipalities, counties and school districts to create charitable funds for this purpose.
"The adoption of the proposed tax credit plan would allow the state of New Jersey to defend itself against the SALT repeal and at the same time encourage contributions to a variety of noble causes that will benefit the public," Sweeney said last week.
"I urge each you to do the same and I call upon the Legislature ... to send to my desk as fast as possible a bill to ensure municipalities can, without any state roadblocks, create the charitable funds needed to implement this program," Gov. Phil Murphy said in a speech to New Jersey mayors in Trenton last week, according to NorthJersey.com. "I will sign it immediately."
In testimony before Congress, acting IRS Commissioner David Kautter said charitable contributions only qualify as tax deductions if the money is given for a charitable purpose.
"Under the general principles for charitable contribution, the primary purpose of the contribution is donative, which is a disinterested and detached interest of generosity," he said.
However, Murphy administration officials and their supporters contend that over two dozen states have similar programs that offset property taxes with charitable deductions.
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