“Increases petroleum products gross receipts tax, reduces sales and use tax and increases gross income tax pension and retirement income exclusion.”
NJEA opposes A-12 (Prieto, McKeon, Schaer, Sumter, Caputo, Vainieri Huttle, Giblin, Rible) to increase the petroleum products gross receipts tax, reduce the sales and use tax and increase the gross income tax pension and retirement income exclusion.
We recognize the need to invest in New Jersey’s transportation infrastructure to increase the safety of those who travel our roadways and believe that increasing the gas tax is a sensible way to make that investment. However, negotiating a deal that raises this tax while reducing other state revenues when the State cannot meet existing obligations is irresponsible and reckless.
Estimates show that by 2021, the tax cuts in this proposal will reduce state revenue by $1.4 billion a year.
This comes at a time when essential services we all depend on – especially struggling families and public education – are shortchanged by the State each year inflicting harm on a broad swath of New Jersey residents. To make matters worse, the tax cuts in this deal disproportionately benefit the State’s wealthiest residents at the expense of poor and middle class families. This is the exact opposite of “tax fairness;” it is welfare for the wealthy. The component of this bill that we find the most troublesome is the elimination of the estate tax. This is the most progressive state tax: impacting those who can afford to pay, and sparing poor and middle class families.
Of the approximately 70,000 people who pass away annually in New Jersey, fewer than 4,000 (4 or 5 percent) owe any estate tax at all. These estates - worth more than $675,000 - belong to New Jersey’s wealthiest households. As a matter of fact, 60 percent of estate tax collections come from estates worth $3 million or more. This revenue has been growing every year, too, which debunks the claim that people are fleeing New Jersey to avoid the estate tax.
New Jersey’s 7 percent sales tax is not burdensome when compared to other states. At 7 percent, with exemptions for essentials like food and clothing, New Jersey’s sales taxes rank 23rd among the states…about average. The sales tax is the largest funding source to fund the state budget each year, so while a three-eighths cut in the sales tax means little to consumers, it will have a devastating impact on all essential programs.
Additionally, while raising the retirement benefit threshold may seem like good news for retirees, the loss of revenue is a reason for serious concern. Consider the benefit of an exclusion from taxes on pension income if public sector retirees have no pension income at all. Unfortunately, this deal - combined with decades of pension underfunding - makes a bankrupt pension fund more likely.
New Jersey public employees currently pay an average of 22 percent of their health care premiums, contribute more toward their pensions and have seen their take-home pay greatly reduced. While public workers have made these sacrifices, the state has failed to fix our state’s structural budget deficit and is putting at risk the future retirement security of hundreds of thousands of public workers who belong to the state pension systems.
NJEA strongly believes that the state should be focused on generating new revenues to help meet its current obligations before it can begin reducing any existing revenues. This deal disproportionately benefits residents with higher incomes, giving little tax relief or benefit to working class New Jerseyans. It puts New Jersey in a precarious fiscal state and sets up future Legislatures for failure.
We urge you to vote “no” on A-12.