Senate President Steve Sweeney today offered a plan that would restore balance to the state’s Fiscal Year 2015 budget by reinstating the millionaires’ tax and adding a surcharge to the tax on corporations, along with other actions (see below). The additional revenue of $1.6 billion will rescue the governor’s spending plan by providing the resources needed for a fiscally responsible budget that maintains the state’s commitment to all residents.
“We face a serious fiscal crisis with a lot at stake. The state budget has a real and lasting impact on the lives of everyone in New Jersey, including senior citizens and retirees. This fiscal crisis didn’t appear overnight, it is the result of actions and inactions over the years. Mistakes were made in the past and often they were repeated, which compounded the fiscal problems,” said Senator Sweeney.
“But it isn’t good enough to just blame others in the past; that won’t solve anything. And it’s not good enough to try to make scapegoats out of any groups or organizations. If you are in a position of leadership you are also in a position of responsibility. Taking on these challenges goes with the job.
“I don’t like raising taxes but the wealthy have benefited the most in recent years. It is time to have them pay their fair share. This isn’t about punishing success, it is about basic fairness. (see below)
“Also a matter of fairness is that this plan will make the full pension contribution that the governor promised. We must keep that promise. Staying true to the promised payments is also a matter of financial integrity. Abandoning the promise will cost more in higher interest rates and lower credit ratings.
“This plan is not only a matter of fairness and responsibility with pension payments, it is really about the full range of government services and opportunities, including such things as property tax relief, college affordability, public schools, law enforcement, transportation and many more priority needs.
“We have to maintain the state’s commitment to all New Jersey residents by meeting all of our commitments. This is a fair and responsible plan that will help meet those needs as it restores balance to the budget in a fiscally responsible way.”
Senator Sweeney’s FY2015 Budget Plan
The Increased Resources
- A 10.75% tax on millionaires = $565 million
- A 10.25% tax on those earning $500k – $1 million = $155 million
- A one-time adjustment (Jan.-June 2014) = $105 million
- A 15% CBT surcharge = $375 million
- A Gross Income Tax Revenue Forecast adjustment
(40% of difference between OLS/Admin projection) = $69 million
- Suspension of BEIP grant payments for one year = $175 million
- Assumption of FY15 lapse = $125 million
Administration found $812 million in lapses in the FY2014 budget, including $47 million in BEIP payments. Assuming $125 million in FY2015 lapses is more than reasonable. The administration can decide where to allocate these lapses.
TOTAL: $1.569 billion
The Wealthiest In New Jersey: Paying Their Fair Share
- The richest 1 percent of New Jerseyans —the tax filers who made at least $556,033 — saw their income grow at a rate more than double than those who earned less than $87,009.
- Total gross income for New Jersey residents grew by $9.6 billion between 2010 and 2011 — the latest available data — with filers who earned more than $556,033 accounting for 20 percent of all the income growth in the state. This group saw their incomes rise by a combined 3.3 percent in 2011.
- On the other end of the spectrum, filers who earned less than $87,009 in 2011 accounted for just 10.7 percent of all income growth. This group saw their total incomes rise by just 1.18 percent.
- Wages – not stocks or other capital gains – accounted for the overwhelming amount of the income growth for the top quarter of filers.
(From the Treasury Department’s report called the statistics of income, which analyzes income tax returns and draws conclusions. The report was published in January and noted wealthy filers are seeing increased income while those at the bottom saw their incomes stagnant or reduced)