WASHINGTON — When it comes to getting help from Washington, New Jersey is dead last.
That’s according to a new report from New York State Comptroller Thomas DiNapoli, who found that in the first year under President Donald Trump’s tax law, the Garden State received 79 cents for every $1 paid in federal taxes, lowest among the 50 states.
That’s a loss of $2,792 per person, also more than anywhere else.
New Jersey sent $24.9 billion more to Washington than it got back, according to the report. That was exceeded only by New York, with $26.6 billion. New York received 90 cents for every $1 in federal taxes, tied with Massachusetts for 47th place. Minnesota was 49th at 89 cents.
The federal money coming back went for Social Security payments, health care programs, transportation, education, defense and other programs.
Because it is home to so many high-income individuals, New Jersey traditionally has been one of the biggest donor states. A 2015 analysis by DiNapoli also put the Garden State at No. 50. A 2019 study by the State University of New York’s Rockefeller Institute of Government placed Jersey behind every state but Connecticut.
But lawmakers from high tax states like New Jersey say the Republican tax law made things worse. The law limits the federal deduction for state and local taxes at $10,000.
The progressive Institute on Taxation and Economic Policy said it would increase the share of personal income taxes paid by residents of New Jersey, Connecticut, New York, California, Maryland and Massachusetts. Republicans claimed the deduction was a subsidy for New Jersey and other high-tax states.
New Jersey lawmakers said the report buttressed their argument that the cap was unfair and should be repealed.
“This is yet another clear example of how New Jersey is footing the bill for the moocher states, who are continuing to take our hard-earned dollars to pay their state bills,” said Rep. Josh Gottheimer, D-5th Dist.
The U.S. House voted largely along party lines in December to double the deduction cap for 2019 tax returns and repeal it for 2020 and 2021. The cost would be recovered by raising the top tax rate on wealthy Americans.
Senate Republicans, though, have refused to bring up the bill for a vote. Many of the leaders opposing the bill come from states that get far more back from the federal government than their residents pay in federal taxes.
Senate Majority Leader Mitch McConnell’s home state of Kentucky got $2 back for every $1 in federal taxes paid. Iowa, home of Senate Finance Committee Chairman Chuck Grassley, received $1.16.
“Republicans’ vindictive capping of the state and local tax deduction to fund their millionaires’ tax cut has made our burden far greater than it should be," said Rep. Bill Pascrell Jr., D-9th Dist., a member of the tax-writing House Ways and Means Committee and a sponsor of the repeal bill.
Trump, who once said he would be “open to talking” about restoring the tax break, threatened to veto the legislation.
The $10,000 cap is less than the average deduction for state and local taxes in every one of New Jersey’s 12 congressional districts.
Before the deduction was limited, the average state and local tax break exceeded $10,000 for 860,000 Jersey households with income between $75,000 and $200,000, according to Internal Revenue Service statistics.
The deduction cap also kept the value of homes in New Jersey state below what they otherwise would be, according to Moody’s Analytics.
Fitch Ratings found that home values in New Jersey and other states hardest hit by the cap rose at a lower level than in those states where the limit had little impact.
The report found the states that got the most back from the federal were New Mexico, with $2.73 for every $1 paid in federal income taxes, and Mississippi, with $2.58. Nationally, the average was $1.21.
Jonathan D. Salant may be reached at jsalant@njadvancemedia.com. Follow him on Twitter @JDSalant or on Facebook. Find NJ.com Politics on Facebook.
Have a tip? Tell us. nj.com/tips.
Get the latest updates right in your inbox. Subscribe to NJ.com’s newsletters.