FOR IMMEDIATE RELEASE: Oct. 4, 2017
Under the “tax reform framework” released by the Trump administration and Congressional Republican leaders on September 27, New Jersey’s wealthiest 1 percent of taxpayers would receive an average $74,000 tax break each year while about 1 in 4 Garden State taxpayers would pay an average of $2,400 more in a year in federal taxes.
That makes New Jersey one of the hardest hit states in the nation, according to a new 50-state analysis of the tax plan released today by the Institute on Taxation and Economic Policy. In fact, the Garden State has the 2nd highest share of taxpayers who would see a tax hike under the Trump-GOP plan of the 50 states, at 26.4 percent. Nationally 16.7 percent of taxpayers would see a tax increase. (Maryland has the highest share, at 30.5 percent, while North Dakota has the lowest share, at 4.2 percent.)
While GOP leaders have pitched the plan as a tax cut for the middle class, the analysis shows that this is not true for New Jersey or the nation as a whole. While most New Jerseyans would, in fact, receive a modest tax cut, on average that cut would amount to less than one percent of their income. The wealthiest 1 percent of the state’s residents, by contrast, would reap a financial windfall, receiving 82 percent of the total tax cuts going to New Jersey while the bottom 40 percent of New Jerseyans would receive just 8 percent of the tax cut, and the middle 20 percent just 9 percent.
“Make no mistake: this proposal is not tax ‘reform’ – not by a long shot. It’s merely a package of huge tax cuts for those who are already doing well in this rigged economy: the very wealthy and large corporations,” said New Jersey Policy Perspective Senior Policy Analyst Sheila Reynertson. “And when this windfall for the top 1 percent is paired with the deep cuts to critical economic security programs like food assistance in the GOP budget, this merely makes today’s runaway inequality even worse.”
A greater share of New Jerseyans face a tax hike under the Trump-GOP plan than just about anywhere else because the plan would eliminate the state and local tax deduction, which disproportionately benefits high-service, high-tax states like New Jersey. Thanks in large part to the loss of this deduction, on the surface this tax plan hits the Garden State’s middle- to upper-middle-income families with significant tax increases. But it’s clear that the state’s low-income working families could also lose big, particularly when one considers the potential cuts to essential public services and safety net programs that are being taken up as companion measures.
“No matter how the GOP messages this plan, it is nothing more than an upward redistribution of wealth,” said Alan Essig, Executive Director of the Institute on Taxation and Economic Policy. “Not only does the plan boost the incomes of the wealthy with surgical precision, it also gives a pittance to most working people and it taxes some in the middle and upper-middle class more, essentially creating an even greater economic divide between the rich and everyone else.”