Op-Ed: “Tax Fairness” -- Unfair to All New Jerseyans Except the Wealthiest
It’s time to stop this misguided mission before everything we value about our state goes on the chopping block
During the first term of President Barack Obama and the emergence of the Tea Party, 95 percent of Republican members of the 112th United States Congress signed what was known as the “Taxpayer Protection Pledge,” opposing all tax increases -- at any cost. The chief architect of this pledge, Grover Norquist is often quoted as stating, “I am not in favor of abolishing the government. I just want to shrink it down to the size where we can drown it in the bathtub."
Why this recent history lesson?
Across our state legislators seem to be operating under their own version of a “tax pledge.” For some it may be inadvertent to follow a script from the extreme right intended to whittle away at our government, but the fact is that the measures followed have the same roots and intended consequence that threatens to put everything that makes our state great -- high-quality schools, proximity and accessibility to major cities, valuable institutions of higher education -- on the chopping block. The formula is exactly the same. Reject tax increases, move tax break after tax break for the wealthy and corporations, and with an almost unbearable hypocritical twist, escalate corporate welfare that has bled state coffers of valuable resources.
This week our treasurer disclosed that the state's revenue projections, often accused of being based on inflated projections, would again fall short by close to $1 billion over two fiscal years. In the same day, members of the Assembly budget committee heard, yet again, that our governor would not consider a gas-tax increase to fund the barely solvent Transportation Trust fund unless legislators capitulate and move a “tax (un)fairness” package that would eliminate an additional $1 billion in revenue. The proposal, which includes the elimination of the estate tax and charity donation deductions seems fair at face value. However, closer inspection reveals that the benefits are almost exclusively directed towards the wealthiest New Jerseyans, and all at the expense of vital services for the rest of us.
There are no ifs, ands, or buts about it, New Jersey cannot afford to squander an additional $1 billion in revenue that undermines the public services and goods we all enjoy in order to facilitate an additional tax break to wealthy New Jerseyans. The facts are clear, only the top 4 percent of New Jersey households are subject to the estate tax. In fact, in New Jersey households in the highest 20 percent of incomes have an average net worth of just $366,000, far below the current threshold of $675,000. In the same vein, charitable donation deductions sound great, except when you analyze the federal data and note that 80 percent of those who take the deduction are claimed by those earning above $75,000 a year. How much are we willing to lose in order to continue down this path? The politically “palatable” isn't always fiscally responsible. These proposals are the poster child of this very thought.
We’ve been down this road before. Christie gives away $6 billion to people making $400,000 or more, or $6.9 billion to powerful and politically connected corporations. He promises that all those tax cuts will trickle down -- that they’ll pay for themselves! The reality, trickle down doesn't. Instead, each time we give the rich a tax cut, the state is forced to make billions in budget cuts to property-tax relief, school funding, transit and public safety or as our state treasurer has recently suggested, healthcare for the most needy among us.
If we really want to dig ourselves out of chronic fiscal precariousness, New Jersey legislators should push their sleeves up and consider smart progressive measures that ensure all New Jerseyans pay their fair share and ensure the quality of government services New Jersey residents have come to expect remain intact. Immediate measures such as reversing the millionaires tax cut granted in 2010, or implementing a corporate business-tax surcharge and mandating combined reporting for corporations that operate in our state would ensure that all pay their fair share for services and goods that make their wealth possible. Additionally, given the fiscal crisis our state continues to find itself in, our state should immoderately utilize the legislative authority provided in contracts between the Economic Development (NJEDA) and corporations receiving tax incentives to suspend corporate tax breaks until our state is in better financial shape. Unless we really want a government small enough to drown in the bathtub, one in which our quality schools falter, our bridges and roads crumble, our public health is compromised, and the overall quality of life we enjoy suffers, we must take fiscally prudent and equitable action.