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Lawmakers outline tax 'shift' to rescue transportation fund

Friday, June 17, 2016   (0 Comments)
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Northjersey.com 06/17/16

A package of proposed cuts to retirement and estate taxes in New Jersey would cost the state government $1 billion a year in lost revenue, to be partially offset by $500 million in tax increases to fund the state’s transportation network, backers of the plan said Monday. “Everybody thinks we’re raising a tax. Actually what we’re doing is shifting” more of the tax burden onto out-of-state drivers, said Sen. Steve Oroho, R-Sussex. Governor Christie said Monday the plan would “be about a $1.4 billion tax increase.” During a speech to the Morris County Chamber of Commerce, Christie said proposals to phase out the estate tax in three years do not go quickly enough. Instead he demanded legislators reduce the tax to zero before he leaves office in two years because, he said, “I don’t trust them” to do it after he’s gone.

Backed by a phalanx of lobbyists from the construction industry and unions, Senate leaders held a press conference Monday to call for an overhaul of New Jersey’s tax system aimed at generating $2 billion a year for road and transit projects, stopping wealthy and middle-class retirees from leaving the state, and avoiding a “property tax explosion” in coming years that threatens to overwhelm local governments, Oroho said. On the revenue side, state leaders must raise $1.6 billion in new taxes and fees by June 30 or begin shutting down transportation construction projects around New Jersey. To accomplish it, the proposal would increase the wholesale tax on all petroleum products by 7 percent, plus an increase of 10 cents on every gallon of wholesale motor fuels. The wholesale diesel tax would rise by 3 cents per gallon, and the tax on jet fuel would increase by 7 percent.

Together, those tax hikes would raise $500 million a year. That’s enough to borrow an additional $1.5 billion annually, together generating $2 billion a year for transportation projects like extending the Hudson-Bergen Light Rail line into Bergen County. The proposed tax cuts involve phasing out the estate tax over three years, and boosting to $75,000 the amount individual retirees may exclude from their income taxes. It also would allow moderate-income residents to claim more money through the earned income tax credit, create an income tax deduction for residents whose gas taxes exceed 1 percent of their income, and allow people to deduct donations to some charities. The plan would double state aid to local and county governments for transportation projects, to $400 million annually. Without such an infusion, local governments across New Jersey will need to raise an additional $10.6 billion from property taxes over the next 25 years to pay for road and bridge improvements as state support declines, Oroho said.


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