This op-ed appeared in the June 19, 2016 edition of the Bergen Record.
“Reckless” and “irresponsible” are two words that come to mind when reviewing the proposals released by New Jersey’s legislative leaders last Friday afternoon. Finally, after two years of staging press conferences at rusted bridges to warn about the looming bankruptcy of the state’s transportation fund, we have a proposal to provide funding for the road and transit networks that shore up New Jersey’s greatest asset: its location in the center of the world’s largest market.
Our legislative leaders have proposed secure financing for New Jersey’s roads and transit for the first time in decades, with quite similar proposals that rely on a number of different fuel tax increases. Both proposals would kick a significant amount of money into capital transportation projects for a decade, and – crucially – both include a tax credit for low-income workers, who already pay more of their limited income to state and local taxes than any other group.
But that’s where the good news ends, and the recklessness and irresponsibility begin.
The proposals, in fact, ignore New Jersey’s perilous financial situation and instead propose to accelerate its steady downward slide. Consider just some of the troubling facts:
- New Jersey has the highest property taxes in the nation with a steady decline in homeowner relief for the last seven years;
- State support for operating costs at public colleges has declined, while tuition rates and student debt have climbed significantly for struggling middle-class families;
- The state’s critical public transit networks have been under-funded, leaving riders to foot the bill, with five fare hikes in the last 14 years, for worsening service on deteriorating equipment with increasing breakdowns;
- Twenty years of raids on the state’s pension funds have produced an unimaginable unfunded liability of $125 billion, with the prospect that civil service pensions will not be fully paid in just seven years; and
- The state is broke, has the second-lowest credit rating in the nation and cannot come close to addressing some of these big problems and others.
Instead of responding to the blatant signs of dangerously imprudent funding, the legislative leadership has decided to continue the practice by combining funding for transportation with a package of large-scale tax cuts that primarily benefit only the wealthy, in the name of “tax fairness.”
In what’s become the cornerstone of both plans, the Senate seeks to phase out the estate tax within three years and the Assembly within four years. The governor, meanwhile, says neither is fast enough and insists on ending the tax within two. In nearly-bankrupt New Jersey, where those working for the lowest incomes pay the highest taxes as a share of their income, while those in the top 5 percent pay the lowest, the three most powerful players in the state are racing to eliminate the state’s most progressive tax, levied on the heirs of just 4 to 5 percent of New Jersey’s most valuable estates each year.
Our leaders seek to erase the taxes for a few thousand wealthy families each year while most of the rest of us pay higher gas taxes without a penny of relief, and everyone will see the results of losing up to $550 million each year in funding for public higher education, public transit and the safety net for those of us who’ve fallen on hard times.
The proponents for erasing the estate tax claim that it will help mainly middle-class families and will keep “job creators” in New Jersey instead of fleeing to warm Florida or high-cost New York. There are plenty of stories about rich folks moving out and some of them are true. But the facts suggest something radically different:
- The number of New Jerseyans claiming millionaire status is growing not shrinking (it grew by 11 percent between 2006 and 2015);
- In the ten years including the Great Recession, the number of households filing $500,000 plus annual income tax returns almost doubled;
- Of the top states Jerseyans “flee to,” four are states with comparable tax rates to New Jersey: California, Maryland, Massachusetts and New York (the number one destination for Jersey migrants);
- Governor Christie’s own budget projects a 3.5 percent increase in revenues from the “death taxes” (higher than the budget as a whole); and
- The number of New Jerseyans moving to Florida decreased significantly after Florida dropped its estate tax.
These facts have been available to our legislators and governor, yet they chose to ignore them. That’s reckless and irresponsible.