WASHINGTON -- President Donald Trump and congressional Republicans could spare New Jersey residents from losing their deduction on state and local income and property taxes and still raise enough cash for their tax cut plan by ending a big break for the wealthiest Americans.

But they are not even considering it.

The tax break in question is the lower rate charged on profits from investments, known as capital gains. Under current law, these profits are taxed at a lower rate than salaries paid to workers.

More than two-thirds of that tax break, 68 percent, goes to the richest 1 percent of taxpayers, according to a 2013 Congressional Budget Office report.

"The whole tax code, including capital gains, should be on the table," said Rep. Bill Pascrell Jr., D-9th Dist., a member of the House Ways and Means Committee that has jurisdiction over tax legislation.

Ending the tax break for the wealthy could actually generate more cash than killing state and local tax deductions.

Lower capital gains rates were worth $1.3 trillion to investors over 10 years, while eliminating the state and local tax deduction would bring in $1.1 trillion, according to the 2013 report.

Furthermore, raising capital gains taxes affects all wealthy taxpayers, while ending the income and property tax deduction singles out residents only in New Jersey and other higher taxed states.

"The Republicans crafting this tax plan favor wealth over work and it would be an outrage if their bill raised taxes on New Jersey homeowners to pay for further tax breaks for investors," Pascrell said.

Besides keeping the lower rate for capital gains, the Republican tax framework eliminates the inheritance tax expected to hit 5,400 estates this year, all them worth at least $5.5 million and less than 1 percent of them small businesses or family farms, according to the Center on Budget and Policy Priorities, a progressive research group in Washington.

While the estate tax hits only multimillionaires, the state and local tax deduction primarily goes to the middle class, statistics show.

Of the 44.3 million taxpayers who took the state and local tax deduction in 2015, 38 million, or 86 percent, reported income of $200,000 or less, according to the Government Finance Officers Association.

The deduction is especially important in New Jersey where homeowners pay the nation's highest property taxes.

Trump's chairman of the Council of Economic Advisers, Kevin Hassett, said the tax outline agreed to by the president and congressional Republican leaders gives lawmakers the ability to direct tax cuts to the middle class rather than the rich.

"That's something that gives the politicians on the Hill the flexibility they need to design something that has a broad appeal," Hassett said.

In the 1986 bipartisan rewrite of the U.S. tax code, President Ronald Reagan agreed to tax capital gains at the same 28 percent rate as other income to avoid giving wealthy Americans most of the benefits.

When President George H.W. Bush and congressional Democrats in 1990 raised the top tax rate to 31 percent, they kept the capital gains tax for investments for more than one year at 28 percent.

The discrepancy exists to this day. Those in the highest bracket pay 39.6 percent on income, but just 23.8 percent on capital gains.

Senate and House Republicans recently took action to fast-track the tax bill by passing budget resolutions that include a parliamentary maneuver designed to exclude Democrats and make it easier to repeal the state and local tax break.

Reps. Tom MacArthur, R-3rd Dist., and Rodney Frelinghuysen, R-11th Dist., were the only New Jersey lawmakers to back the measure.

"It says, 'We don't need you, we're just going to rush it through, just with our votes,'" Democratic Leader Chuck Schumer of New York said on the Senate floor.

House Speaker Paul Ryan, R-Wis., acknowledged that the fight over state and local taxes was a major hurdle, calling higher-taxed states such as New Jersey a "special interest" during a recent speech to the Heritage Foundation, a conservative research group in Washington.

"We're propping up prolifigate big government states and we're having states that actually got their act together pay for states that didn't," Ryan said in the face of statistics showing the opposite.

Of the 10 states where residents most take the deduction, six send more money to Washington than they get back, according to data from the Tax Foundation and the State University of New York's Rockefeller Institute of Government.

Ryan's home state of Wisconsin received $1.02 for every $1 sent to Washington in 2015, according to the Rockefeller Institute study. Kentucky, home of Senate Majority Leader Mitch McConnell, got $1.90, fifth highest among the 50 states.

Meanwhile, New Jersey received just 74 cents per $1 its taxpayers sent to Washington. No other state fared worse.

"What I say to all these states, either you start taking back what you pay into the kitty or don't turn and try to take more from New Jersey by passing an anti- competitive tax provision," said Rep. Josh Gottheimer, D-5th Dist.

Republicans are under political pressure to pass a tax bill, and it remains to be seen whether GOP lawmakers from New Jersey and other high-tax states will buck their party and vote against legislation that hurts their constituents.

More than a quarter of New Jersey taxpayers, 26.4 percent, would pay higher federal tax under the GOP plan, according to a study by the Institute on Taxation and Economic Policy, a progressive research group in Washington. Only Maryland, at 30.5 percent, would be harder hit, the group said.

Another study, released by Americans Against Double Taxation, a coalition opposed to eliminating the state and local tax deduction, also forecast tax hikes for those living in high-tax states.

The report, based on 2015 Internal Revenue Service data compiled by the Government Finance Officers Association, found that the average family of four in a sample zip code in Frelinghuysen's district would see its taxes rise by an average of $4,409, more than anywhere else.

Those represented by MacArthur and Reps. Chris Smith, R-4th Dist., and Leonard Lance, R-7th Dist., also face tax hikes under the Republican plan, the study said.

"This new data makes it crystal clear that many middle-class homeowners throughout the country will see their tax bills increase, often by thousands of dollars," said Bob Chlopak, co-director of the advocacy group.

MacArthur, Lance and Frelinghuysen were among the 27 GOP lawmakers hit with a new $600,000 digital ad campaign by the American Action Network, a nonprofit that does not disclose its donors and shares office space and staff with the Congressional Leadership Fund super political action committee linked to Ryan.

While following Reagan's lead and raising the capital gains tax hasn't been discussed, there is talk about limiting deductions for state and local taxes. Under this scenario, wealthier taxpayers would either lose their deduction or get a smaller amount.

Such a cap could encourage richer residents to move while making it harder for high-tax states like New Jersey to raise the money needed for services, Chlopak said.

"I don't think there's any question that higher-income people who are paying more taxes have great mobility," Chlopak said. "If they lose the deduction, there's more incentive to flee."

Jonathan D. Salant may be reached at jsalant@njadvancemedia.com. Follow him on Twitter @JDSalant or on Facebook. Find NJ.com Politics on Facebook.