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State’s Tax Revenue Still Lags Behind Pre-Recession Levels by 10 Percent

Friday, June 19, 2015   (0 Comments)
Share | 06/15/15

The debate over taxes -- who should be taxed, how much, and what kind of tax should be levied -- is a knotty problem in New Jersey. With the recent state Supreme Court ruling in a major public-employee pension-fund case, this debate has become more pronounced. Democrats who control the state Legislature say they want to increase taxes on the state’s wealthiest residents to bring in more revenue for workers’ retirements. Republicans in the Assembly, meanwhile, say they want to cut taxes as they seek to become the party of power in the lower house this fall.

Yet in New Jersey -- where business taxes have been reduced during Gov. Chris Christie’s tenure -- tax collections did not follow the national trend tracked by Pew over the same period. New Jersey tax collections, adjusted for inflation, were at the end of 2014 still roughly 10 percent behind the pre-recession peak from 2008, according to Pew. Though monthly and even quarterly revenue data often gets little attention in Trenton, how much money the state is taking in from taxpayers more than five years after the recession ended is at the heart of a huge debate inside the State House as the Republican governor and Democrats who control the Legislature clash over how much to put into the state’s chronically underfunded public-employee pension system.

Democrats want to increase taxes on high-earners to bring in more money for the pension system, which covers the retirements of an estimated 773,000 current and retired workers. Christie and other Republicans, meanwhile, say more benefit cuts are necessary because tax hikes would hurt the state’s economy. They’re also supporting the recommendations released earlier this year by a nonpartisan benefits-study commission, including moving employees into a hybrid retirement system with some features of a 401(k) and changing to less-costly health plans. And with all 80 seats in the Assembly up for grabs this November, Assembly Republicans say they would ultimately like to reduce taxes. This year, the Assembly Republicans are also talking about lowering taxes in advance of the November election. They need to pick up nine seats to take control of the Legislature’s 80-member lower house.

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