NJ Democrats Say They’ll Try ‘Millionaire’s Tax’

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trentonNew Jersey’s Democratic lawmakers say they’re going to try to impose a tax on earnings over $1 million – even though they’ve passed such a bill in each of the past two years and Republican Gov. Chris Christie has ridiculed and vetoed it both times.

They also say they’re ready to embrace a separate tax cut that Christie has championed, but only if the state can afford it.

Democratic legislative leaders laid out details of their budget proposals on Thursday with 16 days before lawmakers are required to pass a spending plan for the fiscal year that starts July 1. The officials gave details after emerging from hours-long closed-door Democratic caucus meetings.

Assembly Majority Leader Lou Greenwald, a Democrat from Voorhees who has attracted pointed criticism from the governor, said both chambers will present plans to increase taxes on earnings over $1 million. He said the surcharge would raise about $800 million, all of which would be used to pay for property tax credits for senior citizens who make less than $150,000 and other homeowners with incomes under $75,000.

Christie has vetoed virtually the same plan in each of the past two years, and he has been pushing a plan to reduce income taxes by 10 percent over three years.

But with warnings that the state is not bringing in as much revenue as projected, Democrats have said they’re not sure the state can afford it. A new plan emerged Thursday: Holding $183 million for the cuts in escrow until it’s clear that the state can afford it.

“The governor’s numbers have not been certified by any financial expert anywhere in the country,” Greenwald said.

“Everybody would like to see taxes cut, but at this point we’re looking closely at the revenues to ensure that the revenues will support a tax cut. At the end of the day, I think the people of New Jersey will respect the Legislature that we’re being fiscally responsible,” said Sen. Paul Sarlo, chairman of the Senate’s budget committee.

The lawmakers did not say exactly when it would be determined if the state could afford a tax cut.

Christie’s spokesman did not comment on either plan Thursday. But Christie has constantly lambasted the idea of any tax increase – and particularly increasing some taxes to reduce others.

Democrats have disagreed with Christie over how best to deliver tax relief, though he has signaled a willingness to endorse a Senate plan.

Senate President Steve Sweeney wants to give homeowners a credit equal to 10 percent of their property tax bill, capped at $1,000. Christie proposed a 10 percent income tax credit, but Democrats said that disproportionately benefits the wealthy.

Christie said this week he would not sign a budget that doesn’t include a tax cut, despite sluggish revenue collections.

He reiterated that position Thursday, during a morning news conference at the Statehouse that was called to tout May’s job growth numbers.

“We choose to demand tax relief instead of tax increases and gimmicks and games meant for political purposes,” Christie said.

The governor boasted that New Jersey added 17,600 jobs in May, the largest one-month gain in seven years. However, many of those jobs are seasonal.

Yet revenue collection has underperformed expectations this year, which has some questioning the wisdom of reducing taxes now.

The treasurer estimates tax collections will trail administration projections by $676 million through July 2013.

It will cost $183 million to fund the first phase of the Christie tax cut in the upcoming budget year, but those costs balloon to $1.3 billion a year when the cut is fully phased in starting July 2015.

Christie has said the money will be there, but two recent reports show New Jersey is lagging behind other states in economic growth and proposed rainy day funds, while leading the nation in proposed spending increases.

Christie’s proposed budget diverts more than $200 million from clean energy programs and increases transportation borrowing by $260 million. The administration also relies on energy taxes collected from utility companies in exchange for having electric power lines and transmission poles in towns. The state in 2011 retained $478 million of the energy tax money it collected from the utilities.

The administration is relying on a revenue growth rate of 8.6 percent for the coming year, which Sarlo and others say is overly optimistic and unlikely to be realized.

{The Associated Press/Matzav.com Newscenter}


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