Topic Category: Tax and Budget

Immigration Case Will Have a Lasting Impact on New Jersey Families

Posted on by Erika J Nava

This op-ed appeared in the April 14, 2016 edition of NJ Spotlight.

Next week, the U.S. Supreme Court will hear an immigration case that could either improve the lives of hundreds of thousands of New Jerseyans or needlessly tear families apart.

The oral arguments for United States v. Texas are based on President Obama’s 2014 executive actions, known as Deferred Action for Parents of Americans and Lawful Permanent Residents (DAPA) and expanded Deferred Action from Childhood Arrivals (DACA). The fate of these actions now hang on the eight-justice Supreme Court. A decision could come as early as June.

The executive actions were designed to decrease family separation by deferring deportation to about 5 million people, including 200,000 in New Jersey. But a year and half later, the pragmatic progress represented by this initiative is stalled, as are improved lives for millions of striving immigrants – all thanks to political obstructionism.

The lawsuit filed to block the president’s actions – a suit supported by Gov. Christie in a “friend of the court” brief – argues that these common-sense reforms would cause financial harm to the states, which would be tasked with issuing driver’s licenses to eligible immigrants. This narrow argument fails to acknowledge that states could easily increase the cost of licenses to cover the new expenses. But more importantly, it completely ignores the fact that the executive actions would actually boost – not depress – state revenues.

The case ended up in the hands of the Supreme Court after a federal judge in Texas ruled against the Obama administration and the Fifth Circuit upheld a temporary stoppage of the programs.

In the meantime the livelihoods of hundreds of thousands of New Jerseyans hang in the balance. Undocumented parents, who are the primary beneficiaries of these actions, are waiting while they live in fear of deportation and being separated from their U.S. citizen children.

Without pragmatic immigration reforms, these Garden State residents remain in the shadows, unable to fully contribute to the state’s economy and unable to live a life without constant fear. And New Jersey loses out on the economic benefits these policies would bring as well.

New Jersey, with one of the highest undocumented population in the country, would collect more taxes under this executive action on immigration. Currently, undocumented residents pay about $590 million a year in state and local taxes – which would increase by an estimated $24 million under the executive actions.

So what will the high court do? While most experts are convinced that the actions are legal, and that the court will rule in favor of common-sense policies not rhetoric, only time will tell. Justice Scalia’s death left the Supreme Court with eight justices, so a tie vote is increasingly possible, which would send the case back to the Fifth Circuit that already blocked the programs.

A tie or a 5-3 vote against the programs would put more pressure on the next president to come up with a solution to deal with the reality of our current immigration system that continues to break up families.

The court’s decision will disproportionately impact New Jersey, as home to one of the largest undocumented populations in the nation. New Jersey needs federal policies that embody common sense and a humane approach for our neighbors who live in fear of being separated from their families and the communities they call home.

Reality Check: David Tepper’s Move Will Hardly ‘Destroy’ New Jersey’s Budget

Posted on by Jon Whiten

The breathless headlines that make for clickable stories and profitable media outlets don’t always make for an accurate understanding of an issue. Case in point: a recent wave of stories in outlets across the country about the effect that David Tepper’s move to Florida from New Jersey will have on our state’s budget.

Tepper, who was once New Jersey’s wealthiest man, has left for Florida, saying that “family considerations” – not taxes – were the main factor. Still, the modest but important impact that Tepper’s move will have on New Jersey’s budget is being used by opponents of a common sense tax structure as an example of why the state should move away from taxes being based largely on the ability to pay.

State budgets – and tax structures – are about more than managing risk, though they are about that too. More importantly, state budgets are  moral documents that reflect the values of a state by pinpointing priorities and determining who pays how much to make the state a great place to live for everyone. If the choice is between modest volatility and being equitable to everyone, we’ll take a tax structure that’s fair any day of the week.

At last week’s hearing on the proposed state budget, the Office of Legislative Services – in its usual rundown of revenue-forecasting risk – explained how Tepper’s move could affect income tax revenues.

OLS noted that a 1 percent forecasting error for income taxes could swing revenues by $140 million. Despite the widespread reports, it did not say that Tepper’s move would cost New Jersey $140 million. Without knowing how much income tax the hedge fund giant used to pay, it’s tough to put an absolute number on how much he’ll save on income taxes by moving to Florida, which has no income tax. But let’s say, for the sake of argument, that $140 million is the number.

While $140 million is nothing to sneeze at, particularly in New Jersey’s distressed financial climate, some perspective is helpful.

$140 million is less than 1 percent of the anticipated revenues in this year’s current budget. It’s only 18 percent of the state’s estimated surplus, which is one of the smallest in the country (and should be rebuilt to plan for contingencies like this, and other larger ones).

$140 million is also far less than most recent round of business tax cuts, which are costing the state $660 million a year in lost revenue. And it certainly pales in comparison to New Jersey’s recent surge in corporate tax subsidies, which have the state on the hook for nearly $7 billion in lost revenue over the next 10-15 years.

And despite all the doom and gloom, it’s also worth reiterating a crucial point: New Jersey is losing its wealthiest resident, but it is not losing wealthy residents. In fact, the state is a very attractive place for wealthy people to live, work and raise families.

Between 2003 and 2013, the number of New Jersey households with incomes over $500,000 almost doubled, jumping to 53,212 from 28,178, according to the state’s annual comprehensive financial audits. It’s worth noting that this growth occurred during a time that income taxes were raised not once but twice on these wealthy households.

New Jersey also has the third most millionaire households on a per-capita basis in the nation, according to one wealth management firm’s estimates. And the share of these households with over $1 million in “investable assets” has grown to 7.1 percent of all households in 2014 from 6.5 percent in 2006, representing an increase of about 25,000 millionaire households.

So let’s hope that Mr. Tepper enjoys being closer to his family, and all that Florida sunshine. He can do so with a clear conscience, knowing that his move hasn’t wrecked New Jersey’s finances. And those who don’t much care if New Jersey’s tax system is equitable or not should stop using him as the poster boy for their pet cause.

This Tax Day, Never Forget: Progressive Taxes Built New Jersey

Posted on by Sheila Reynertson

This op-ed appeared in the April 9, 2016 edition of the Star-Ledger.

New Jerseyans are a proud bunch. We love to boast about all the things that make New Jersey a great place to live and raise a family. Great public schools, affordable state colleges, easy access to New York or Philadelphia – via an intricate network of roads, bridges, tunnels and public transit – these are the major selling points used by real estate agents and potential employers alike.

But to build a strong state economy that works for all New Jerseyans, we need to invest in these assets. And that investment isn’t possible without taxes.

New Jersey needs quality schools and preschools, affordable colleges and universities, and effective job-training so more people have the changing skills that can help businesses thrive and help hard-working people climb into the middle class. And businesses want and need safe and efficient roads and bridges, vibrant communities, and the other ingredients of a good quality of life. Only by investing in them can we build a strong economy and create jobs.

Yet these and other assets have been severely underfunded in the state budget year after year. Whether we’re looking at K-12 education, preschool expansion, investment in public transit and road maintenance, support for higher education, or vital services for families across the state, the pattern holds: investment has either declined, or failed to keep pace with rising costs.

So given this dire financial situation, and the state’s inability to invest in what works to grow the economy, you’d expect New Jersey policymakers to be eyeing new revenues to pay for these essential assets and services.

But instead, policymakers are pushing to cut $550 million from the general fund by eliminating the estate tax, a tax paid by just a handful of wealthy families every year. Eliminating this tax would undermine our ability to support the important services that businesses and families rely on every day.

Proponents of eliminating the estate tax root their argument in fuzzy math and the long-discredited trickle-down economic theory. They claim that by dropping a surcharge on inherited wealth, New Jersey’s economy will generate enough revenue to make up the difference. If that sounds too good to be true, that’s because it is.

Let’s back up a minute. When New Jerseyans die, the wealth they leave behind for others is potentially subject to two taxes – the estate tax and the inheritance tax. The estate tax was established back in 1934 at a time when wealth inequality was at its peak and progressive taxation was seen as a tool to give equal opportunity to all. The estate tax, which is levied on estates larger than $675,000, is the more progressive of the two taxes, meaning that it is a tax absolutely based on the ability to pay.

Today, we are again experiencing a level of wealth and income inequality not seen since the 1920s. Yet the policy in place that has traditionally fought dynastic wealth is being portrayed as a burden on the individual inheriting a fortune they did not earn. Anecdotes about “middle-class” families being hit by the estate class abound. Yet stories are stories, and facts are facts. About 3,000 to 4,000 estates pay this tax in any given year, which represents just 4 percent of all estates. Only 94 estates pay over 40 percent of the estate tax in a given year. These are the very largest estates with taxable assets of more than $5.3 million. Eliminating the estate tax would give each of these heirs a tax break averaging $1.3 million.

We should focus on making sure we have the resources we need to invest in what’s important. If we don’t, we will limit New Jersey’s opportunities and undermine our own prosperity.

Our country and our state became great because the people who came before us made the decision to invest in good schools, a strong transportation system and the other building blocks of economic growth. We owe it to our kids to continue that commitment to New Jersey’s prosperity by preserving the estate tax.

New Jersey Has Lost its Wealthiest Resident But That Doesn’t Change the Facts About Wealth and Taxes

Posted on by Jon Whiten

Yesterday news reports surfaced that David Tepper, once the wealthiest resident of the Garden State, has decamped for Florida. The article said that “family considerations” were the “main factor” behind Tepper’s move. But that didn’t stop some pundits and lobbyists who’d like to cut taxes for other wealthy families from pointing to taxes as another key factor. That chorus will likely grow louder, and Tepper’s move will likely become part of the well-worn tale about how New Jersey can’t seem to hold onto wealthy people, because our taxes are too damn high.

The problem with that tale is it’s just not true.

In fact, New Jersey continues to be a top state in its ability to grow wealthy residents, who come or stay here for well-paid jobs and excellent opportunities for their careers and their families. A few quick facts:

Between 2003 and 2013, the number of New Jersey households with incomes over $500,000 increased by 89 percent, jumping to 53,212 from 28,178, according to the state’s annual comprehensive financial audits. It’s worth noting that this growth occurred during a time that income taxes were raised not once but twice on these wealthy households.

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New Jersey also has the third most millionaire households on a per-capita basis in the nation, according to one wealth management firm’s estimates. And the share of these households, with over $1 million in “investable assets,” has grown to 7.1 percent of all households in 2014 from 6.5 percent in 2006, representing an increase of about 25,000 millionaire households.

The bottom line is that while New Jersey may lose some wealthy residents in any given year, such as Mr. Tepper, the so-called “exodus” of wealth is a manufactured crisis created by lobbyists who are seeking to reduce taxes for corporations and the wealthy – and it has no basis in reality.

Reject Estate Tax Repeal & Boost Assistance for Poor Families

Posted on by Raymond Castro

By Raymond Castro and Sheila Reynertson

The 2017 budget presents the state the perennial challenge of funding core priorities that address the needs of all New Jerseyans. Like years past, the price tags of these priorities are daunting in the face of a state economy that continues its slow recovery. What is different this year is a call for a generous tax cut for a handful of New Jersey’s wealthiest families. We strongly recommend that the state halt efforts to repeal the estate tax given the enormous obligations on the table.

For example, the budget proposes a $1.862 billion pension payment, which is a fraction of what is actuarially required. By shortchanging this key priority, the unfunded liability will continue to balloon.

The budget also calls for another year of flat funding for the mandated school aid formula, which translates to a $1 billion short for direct aid for K-12 education. Operating aid to public colleges and universities is also flat funded this year, costs that will likely be passed onto students through more tuition hikes.

Another year of stealing environmental settlement money is in store, leaving the Department of Environmental Protection $100 million short for key programs like lead abatement and cleaning up dangerous pollution across the state.

And smaller programs face cuts which have real-life consequences. Programs like domestic violence services and prevention, which is facing $1.8 million in cuts, and women’s health services that provide contraception and STI prevention to over a million women don’t expect to see its $7.5 million in funding restored for a seventh straight year.

Even in this dire fiscal condition, where the state can’t meet its existing obligations or provide the proper level of public services for its 8.9 million residents, the talk of Trenton is whether we are going to blow a $400 million hole in the budget by cutting taxes for a few thousand wealthy families.

Proponents of repealing the estate tax insist that it would pay for itself because it would help attract and retain wealthy families who would otherwise avoid or leave New Jersey. They point to a deeply flawed study that claims New Jersey has “lost” more than 2 million people over the past decade, taking $18 billion in state income with them, apparently in protest of the state’s high taxes. Yet a more comprehensive analysis of the data clearly demonstrates that New Jersey’s population has remained stable and that the state income has actually grown by $103 billion in the past decade.

Putting aside the tax migration debate, the fact remains that the estate tax has always helped, not hurt New Jersey. The state is adding – not losing – wealthy families, and the revenue collected from this and the inheritance tax is growing, not shrinking.

In fact, the proposed 2017 budget expects to collect $848 million from the inheritance and estate taxes – the highest amount ever.

A tax cut that benefits just the wealthy few is glaringly out of step with budget priorities of New Jersey, will make it harder to restore earlier funding cuts and will make it nearly impossible to do much to tackle some of the state’s other big problems, like growing poverty, for example.

To address the alarming increase in extreme child poverty in New Jersey, we strongly recommend additional funding to increase the Work First New Jersey grants which would directly benefit 54,000 children. As you may be aware, we recently released a comprehensive report on this issue and the findings were startling. We should all be embarrassed that these grants have not been increased in 29 years and that we now have the tenth lowest grant in the nation when housing is factored. New Jersey also has the lowest grant in the Northeast, which is almost half New York’s level.

Because of the eroding effect of inflation, the value of the maximum WFNJ grant, which is $424 a month for a family of three, has been cut in half since the last increase in 1987. It has gone from 61% of the federal poverty level in 1981 to only 25% of the poverty level today. New Jersey spends about $360 million less annually today on WFNJ assistance to families than it did in 1997 when it was established.

You might be asking yourself, how can any family live on so little? The answer is they can’t; thousands of families in WFNJ are routinely evicted from their homes and have ended up in shelters or motels at much higher cost to the state. The impact on these children of not having a stable home is unimaginable.

Since eligibility is based on the WFNJ grant, far fewer poor children are eligible for any assistance. Whereas in the past, most poor children received help, today over 80 percent do not received any assistance. Unless something is done soon, WFNJ will cease to be a viable safety net for children.

Giving all children a shot at success is not only the right moral choice, it’s a much better investment. The newest research shows that poverty costs New Jersey $13 billion each year in reduced productivity, increased crime and poorer health outcomes.

There is no question that the WFNJ grant is woefully inadequate, even by the state’s own standards. Since 2003, the Department of Human Services has established a standard for decency that takes into account real needs of a family including the cost of housing. That standard is now $2700 for a family of three, seven times higher then the current WFNJ grant.

The research shows that many families go in and out of poverty depending on their employment situation. The trick is to provide the supports that families need while they are working to prevent dependence and the temporary cash and employment assistance they need when they lose their job or other income. Although it could be better, the state has made substantial improvements in supports for working families. However where the state has completely failed is helping the poorest families who are unemployed and have no income at all. They deserve a shot at the middle class too.

Thank you.

Increasing New Jersey’s EITC to 40 Percent Would Make Tax Structure More Equitable

Posted on by Jon Whiten

Increasing New Jersey’s Earned Income Tax Credit (EITC) could boost the incomes of nearly 600,000 working families in the state who aren’t paid enough to get by, lift or keep many of these people out of poverty and give kids in these families a better shot at success later in life, as my colleague Brandon McKoy noted in legislative testimony earlier this week.

But increasing the state EITC to 40 percent would also help make New Jersey’s state and local tax structure more equitable by reducing the share of income the state’s residents contribute in taxes.

As it stands now, New Jersey taxpayers who make less than $22,000 a year – the bottom 20 percent – pay the highest share of their income towards state and local taxes. That’s because, even with a state income tax that is highly progressive and based on the ability to pay, other state and local taxes – namely property and sales taxes – are regressive and help tip the overall scales of the structure out of balance.

If policymakers increase the EITC to 40 percent, those poorest households would still pay the largest share of their incomes towards taxes, but not by nearly as much.

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Want ‘Tax Fairness’? Boost the Earned Income Tax Credit

Posted on by Brandon McKoy

These are prepared remarks, on A-40, set to be delivered to the Assembly Appropriations Committee this afternoon.

Mr. Chairman and members of the committee, good afternoon and thanks for the opportunity to testify in front of you today. New Jersey Policy Perspective wholeheartedly supports increasing New Jersey’s Earned Income Tax Credit – or EITC – to 40%, as proposed in A-40.

The EITC is a tax credit designed for families where people are working but not being paid enough to get by. Working families with qualifying children and earned incomes up to $52,247 are eligible for this tax credit; adults without children are eligible with earned incomes up to $14,590. These families – and there are nearly 600,000 of them in New Jersey – receive an essential boost at tax time each year from the federal EITC. The state credit supplements the federal one at a rate of 30%, and adds about $675 to the average New Jersey family’s credit. This is essential for low- and moderate-income working families in high-cost states like New Jersey.

Increasing the EITC to 40% would boost the annual take-home pay for the state’s lowest earners by as much as $600, enough to cover most of one month’s rent for some families. The average New Jersey recipient of this credit would get about $225 more each year.

The extra dollars that these low-wage workers and their families receive each year help keep many of them out of poverty. The EITC keeps more than 150,000 New Jerseyans out of poverty each year, including 79,000 New Jersey children.

This credit also has a proven track record of helping working families, boosting the economy and increasing kids’ chances at success.

The latest academic research on the effects of the EITC finds that parents who receive the EITC work and earn more, which helps not only them but also helps their children. These kids then do better in school, and – as they grow up – are more likely to attend college and to earn more as adults.

And on the economic side, the EITC is a direct shot in the arm for local economies, since families tend to spend these tax credits immediately and locally on short- to medium-term needs like buying clothes for their family, repairing the family car, replacing household items like furniture or catching up on past-due rent or utility bills. Due to this immediate and local spending, economists estimate that every dollar of EITC ends up generating $1.50 to $2 in local economic activity.

Increasing the state EITC to 40 percent will further boost this economic impact, generating about $120 million in new tax credits each year that will spur at least $180 million in economic activity. Like the credit itself, this economic boost will be spread around the state, bringing millions of dollars of spending to almost every county.

Unlike some of the other high-profile tax proposals being discussed right now by the legislature, boosting the EITC truly represents “tax fairness.” It is highly targeted to those who need it most, and it has an outsized impact. Investing in a program that does so much to help low-income families across New Jersey is common sense. Thank you for your time.

Closing Corporate Loopholes Would Make Tax Code Fairer & Boost Revenues

Posted on by Sheila Reynertson

These remarks, on S-982, were delivered to the Senate Budget Committee this afternoon.

Good afternoon, Mr. Chairman and Senators. Thank you for the opportunity to speak here today, and thank you, Mr. Chairman, for sponsoring this common-sense legislation to implement combined reporting in New Jersey.

This bill is a matter of tax fairness for New Jersey businesses that don’t have the bandwidth to hide income in out-of-state tax shelters. It is also a matter of collecting New Jersey’s fair share of corporate tax income – up to an additional $290 million, according to OLS – to help invest in the building blocks of a strong, healthy economy. Now is the time to update our corporate tax code and get in line with the 25 other “combined reporting” states, which include every single state in the Northeast.

When New Jersey’s legislature last addressed business tax reform in 2002, combined reporting was mostly left off the table. And an appointed commission assigned to review the new law essentially tabled the possibility of expanding combined reporting. At that time, only sixteen states had fully adopted combined reporting. Since then, nine states plus Washington D.C. have passed legislation to require this pragmatic corporate tax policy.

These states recognized that the failure to include combined reporting in their corporate income tax structures gives profitable multistate corporations free rein to artificially shift income out of the state and avoid paying taxes. Combined reporting uniformly stops these corporations from taking advantage of the tax loopholes that have remained in place, and new ones that corporate accountants may come up with in the future.

Claims that this tax policy is too burdensome for these corporations are unfounded. The continued willingness of these large corporations to maintain operations and even expand business in combined reporting states speaks volumes about the neutral impact this tax policy has on economic development. Ninety-four percent of New Jersey’s largest employers already maintain facilities in at least one combined reporting state. For these corporations, combined reporting is nothing out of the ordinary and is accepted as another cost of doing business.

Expanding combined reporting in New Jersey would level the playing field for all businesses in New Jersey while increasing the resources that states need to be able to invest in vital services like higher education, transportation infrastructure and public safety – services that all businesses rely upon and consider when making long-term plans.

New Jersey Policy Perspective fully supports this bill and we hope that it will soon get a vote from this committee and from the rest of the legislature. Thank you.

Eliminating the Estate Tax Protects Inherited Wealth at the Expense of Shared Prosperity

Posted on by Sheila Reynertson

These remarks on S-1728 were delivered to the Senate Budget Committee this afternoon.

Good afternoon, Mr. Chairman and Senators. Thank you for the opportunity to speak here today.

Eliminating the estate tax means protecting inherited wealth at the expense of addressing rising poverty rates among children, a dismal share of affordable housing and higher education that is increasingly out of reach for New Jersey’s middle-class families. It means pushing aside expansion of universal pre-K education and modest but no less important investments like reproductive health care for low-income women and lead removal.

We are talking about a tax that affects an average of just 3,000 estates a year – the 4 percent of estates that have the most wealth to pass down. And on the other side of the ledger, we’re talking about a tax that contributes $300 million to the state’s priorities – and likely upwards of $400 million in the 2017 budget recently proposed by the governor.

That revenue is absolutely vital to making New Jersey a great place for everyone who lives and works here, whether or not they happen to be among the lucky 4 percent that actually pay this tax.

This bill is being proposed at a time when we have an extensive list of underfunded budget priorities. The proposed pension payment for 2017 is half of what is needed to keep the fund healthy, the school funding formula has been underfunded cumulatively by $7 billion, state funding for higher education has dropped 22 percent, $1 billion of the Clean Energy Fund has been siphoned off to plug budget holes. We apparently can’t even afford $10 million to prevent kids from being poisoned by lead. It is crystal clear that eliminating the estate tax would make this situation worse.

Despite the well-worn myth, this is not a tax that hits the average New Jersey family.

The median net worth of New Jersey households is $117,000, according to the Corporation for Enterprise Development. The threshold for filing an estate tax return is five times that amount. Even households at the top – those with the highest 20 percent of assets – have an average net worth of $366,000, still far below $675,000 – the level at which the estate tax kicks in.

What’s worse, this proposal is being considered in the midst of a modern-day Gilded Age. Here in New Jersey, wealth has become increasingly concentrated in very few hands. The wealthiest 1 percent holds 21 percent of the state’s income – a level of inequality not seen since the 1920s.

Yes, New Jersey’s estate tax is an outlier with its low threshold of $675,000 and has been for many years. Yet we consistently are one of the three wealthiest states in the country, we are adding – not losing – wealthy families, and the revenue collected from this and the inheritance tax is growing, not shrinking. In fact, it has grown by 44 percent in the last 13 years. And the 2017 budget just proposed expects to collect the highest amount ever from these taxes, at $848 million.

We are not losing wealthy families over this tax. In fact, we are creating and attracting new wealthy families who love living here. They appreciate our excellent schools, our open spaces, our walkable villages, our convenient transit system into two of the finest cities on the East Coast. But if we don’t priorities investments into these impressive assets, we won’t have much to boast about anymore.

Losing the funds from this tax would seriously threaten investments in the assets that build a strong state economy for all of us, while benefitting very few.

New Jersey’s Investment in Infrastructure is Fifth Lowest in Nation

Posted on by Jon Whiten

New Jersey is among the states investing the least on public infrastructure that is vital to creating good jobs and promoting full economic recovery. The Garden State has spent the fifth lowest amount on transportation, water treatment systems, and other forms of essential infrastructure in the past ten years, when measured as a share of state’s economy.

New Jersey’s investment in all types of capital improvements – which is vital to creating good jobs and promoting a full economic recovery – has also been declining, from 1.76 percent of the state’s economy in 2004 to 1.4 percent in 2013. That’s a 20 percent drop that helped move New Jersey seven spots down the rankings of state investment, from 12th lowest in 2004 to 5th lowest in 2013.

These figures come from “It’s Time for States to Invest inInfrastructure,” a new report released this week by the Center on Budget and Policy Priorities, a national partner of New Jersey Policy Perspective. The author, Senior Fellow Elizabeth C. McNichol, shows that now is the time for New Jersey to reverse years of decline and step up investment in better highways, public transit, and ports.

The report, which comes about four months before New Jersey runs out of money to invest in transportation infrastructure projects, illustrates the clear need for the Garden State to not only renew the Transportation Trust Fund but to increase the paltry amount of investment it’s been making in transportation infrastructure – an increase that can only occur if New Jersey increases its second-lowest-in-the-nation taxes on gasoline. It’s clear that the modest impact of the increased tax on most New Jerseyans would be a wise investment that would pay enormous dividends for the state’s economy.

The one asset that no competing state can match is New Jersey’s location in the middle of the largest consumer market in the world with access to both New York and Philadelphia. But that asset only counts if the state invests heavily in modernizing, improving and expanding it transportation networks. Our future prosperity depends on it.

The report’s findings make clear that investment in unmet infrastructure needs will improve New Jersey’s economy now and in the future. Modernizing transportation systems and other infrastructure boosts productivity by supporting businesses and residents, improving the education and job readiness of future workers, and helping communities to thrive. Key infrastructure improvements also will provide immediate job opportunities for New Jerseyans who are working less than they would like and making less than it takes to get by. Infrastructure investments typically bring higher wages and better quality of life for years in the future.

The report finds that every state needs infrastructure improvements that have the potential to significantly boost private sector investment and long-term economic growth, and warns that neglecting infrastructure has serious consequences for a state’s growth and quality of life.

“States must turn their attention back to the type of infrastructure investments that will boost productivity, support business growth, create jobs, provide a healthier environment, and improve opportunities for all of their residents,” McNichol wrote. “States continue to ignore needed investments at the country’s peril.”

Despite dramatic evidence of the benefits of infrastructure investment, decades of neglect have led New Jersey’s residents and businesses to grapple every day with crumbling roads, outdated public transit systems, and unsafe bridges. The annual cost of New Jersey’s repair-thirsty roads alone is $3.6 billion, or $605 per motorist each year, according to the American Society of Civil Engineers. Add to that the costs of New Jersey’s rickety commuter train network, which had more than 200 major breakdowns in 2014 (four times worse than the national average) on top of countless major delays, and it’s clear that the lack of investment in transportation is costing the Garden State serious dollars and harming the state’s business climate.

Despite the fact that New Jersey’s low fuel taxes haven’t been increased in 26 years, state policymakers have delayed action on fixing this transportation-funding mess, and many are now insisting on “trading” a desperately-needed fuel tax increase with an elimination of, or major cuts to, taxes on inherited wealth in the name of “tax fairness.”

This is not only the polar opposite of “fairness” – a proposed elimination of a tax that only the wealthiest 4 percent of New Jersey estates pay in exchange for a tax increase that would affect poor and working families the most – it’s also a poor strategy for economic growth and a poor choice for New Jersey because tax cuts take resources away from public universities, and other investments that produce a talented workforce and support business’s needs. The report warns that paying for infrastructure improvements by cutting support for other services is a short-sighted choice that reduces the long term benefit.

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