Two ways legislative leaders should target the wealthy

Published on Jul 24, 2018

This op-ed appeared in the June 18, 2018 edition of the Star Ledger

The drama over next year’s budget is intensifying. On the heels of an administration that delivered over $10 billion in tax cuts to the wealthiest among us — at the expense of essential investments in property tax relief, affordable college education, reliable transportation and more — Gov. Phil Murphy’s first proposed budget suggests that millionaires pay their fair share and seeks to narrow the widening gaps of income inequality that threaten our state.

Since the Great Recession, New Jersey’s economy has been one of the slowest to recover, with many families still struggling today. The percentage of households considered to be “working poor” who cannot meet everyday costs — forget a weekend trip or monthly dinner out — has climbed to more than 40 percent. The middle class is continuing to shrink and it’s a problem that will not be fixed by further cuts to programs that working families rely on.

Murphy ran and won on a platform centered on reinvesting in our state’s critical assets and making our communities more affordable. He was honest with New Jersey’s voters and did not hide the fact that his agenda would require new revenues.

While legislative leaders seem to agree with the governor’s spending proposals, they aren’t enthusiastic about his plan to fund those initiatives. Senate President Steve Sweeney, D-Gloucester, and Assembly Speaker Craig Coughlin, D-Middlesex — both of whom previously voted for a millionaires tax five times — now oppose it, suggesting it would drive the wealthy out of the state. And regarding the restoration of the sales tax to 7 percent, many legislators oppose it altogether.

The millionaires tax is supported by 70 percent of New Jersey’s voters, so there’s no political danger there. And the assertion that the wealthy will flee the state if asked to pay their fair share is belied by the fact that, when combining the effects of the Trump tax cuts and Murphy’s budget proposal, millionaires will be made whole with a modest bonus. At the end of the day, they’re still making out just fine.

As for the sales tax, when legislators cut it from 7 percent to 6.625 percent, it cost the state nearly $600 million in revenue. Since then, the average New Jersey family has enjoyed less than $100 more in its pocket every year while the wealthy are saving a ton on big-ticket items such as yachts and fancy cars. Not to mention the reality that many establishments are still charging the 7 percent rate because it’s simply easier to calculate. So what good has the cut been if not everyone is following the change, the state’s ability to invest in its assets is crippled, and middle-class families aren’t even saving enough to pay for a cup of coffee a week? Restoring the sales tax to 7 percent makes financial sense — hardly anyone asked for or noticed the cut in the first place, and those who did don’t need any more help.

The key fact here is that the wealthy have benefited at the expense of everyone else for far too long, leading to worsening levels of income and wealth inequality. That’s a serious problem that Democrats claim to care about fixing. Now they have a chance to actually do something about it by making sure the wealthy contribute their fair share so that working-class and middle-class families can finally get the breaks and help they deserve.

Without making the tax code fairer, middle-class families will continue to suffer. Murphy won his election by telling the truth about the state failing to raise the revenues required to balance the books and make critical, targeted investments. He ran and won on improving opportunities for our educated, talented workforce and helping the many working families who are a paycheck away from bankruptcy. The Legislature needs to help ensure that this popular vision — one that they’ve historically supported — is realized this year and sustained going forward.

What happens over the next few days will determine whether or not New Jersey can finally pursue responsible budgeting that pays for our obligations and invests in our communities.

The choice is simple — either raise new revenues now that can be sustained, or continue to kick the can down the road and accelerate the state’s downward deterioration. The era of one-shot gimmicks and magical thinking must end, so let’s stop avoiding the hard decisions and do what’s necessary to ensure a stronger New Jersey that works for all.

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