The current transportation funding proposal championed by New Jersey’s legislative leadership, and advanced out of the Senate Budget Committee last week, includes a much-needed increase in New Jersey’s fuel taxes, which is crucial to ensuring New Jersey’s economic future. But the good news ends there, as the flip side of the coin is a big package of tax cuts that will disproportionately benefit the state’s wealthiest residents and heirs while making it all that much harder for New Jersey to pay for essential services and targeted investments to grow the economy in the future.
The tax cuts are weighted towards those who have little need for relief – and those families stand to receive much larger breaks, dollar for dollar. So while eliminating the estate tax will deliver an average tax cut of more than $100,000 to a few thousand heirs (and an average tax cut of more than $1 million to those inheriting the very largest estates), boosting the Earned Income Tax Credit will give nearly 600,000 striving and struggling working families a credit of about $250 each.
$896 million: The total amount of lost revenue from the five tax cuts and credits
62%: The share of that amount that will be split between about 4,000 heirs of New Jersey’s largest estates, via the total elimination of the estate tax ($552 million) = an average tax cut of about $138,000.
- Approximately 72% will go to a few hundred (about 22%) of the heirs who currently pay the tax; those who are inheriting the largest multi-million-dollar estates
- The rest (just 28%) will go to 78% of the heirs who currently pay the tax; those who are inheriting smaller – but still sizable – estates valued between $675,000 and $2 million
- The 96% of estates left by deceased New Jerseyans that are worth less than $675,000 will continue to be untaxed
18%: The share of that amount that will be split between about 200,000 New Jersey households with annual retirement income between $10,000 and $100,000, via a 400 percent expansion of an existing tax exemption on retirement income = an average tax cut of approximately $820
- About 84% will go to the top 40% of all New Jersey households (those with annual incomes over $79,000).
- About 16% will go to households in the middle (with incomes between $49,000 and $79,000)
- Just 1% will go to the bottom 40% of all New Jersey households (those with incomes below $49,000), because these taxpayers are already largely covered under the current exemption.
15%: The share of that amount that will be split between nearly 600,000 working families who are struggling to get by in high-cost New Jersey, via the increase in the state Earned Income Tax Credit to 40% of the federal level = an average tax cut of $250