Prioritizing Corporations Over People in New Jersey

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Although it is less than a month into the New Year, the battles over New Jersey’s budget are still going as strong as ever.

The so-called “Back to Work” package of bills has already passed the New Jersey legislature and is awaiting Governor Chris Christie’s signature.

As New Jersey Policy Perspective explained in their January 24th Monday Minute, six poorly conceived tax breaks constitute over $568 million of the package, including a change in the deduction of net operating losses, restoration of film tax credits, and tax credits for historic preservation.

One especially poorly conceived part of the package will shift the state to the "single sales factor" method of calculating multistate corporations' tax liabilities. This measure would result in an estimated $215 million loss of revenue while providing no benefit to corporations that do all their business in New Jersey. It would also create serious economic distortions resulting in many businesses in New Jersey facing higher tax rates.

While showering corporations with over $800 million in tax breaks, Christie is still resisting any effort to reinstate the ‘millionaire’s tax’, which would increase the marginal tax rate on income over $500,000 by 2%.

One needle of good news in the haystack of proposals by Christie is his decision to restore the state's property tax rebate. About 600,000 senior citizens and disabled individuals lost out when Christie decided to stop the rebate program last year. While details of the new proposal are still unclear, it apparently would restore credit to some of these taxpayers.

Although Christie extolled the virtues of cutting taxes for the wealthy and cutting spending during his State of the State Address, he largely failed to mention that his policies are already having devastating effects. Municipalities are finding it difficult to perform basic functions like snow removal. Massive service cuts are hitting cities like Camden, which was forced to slash half its police force.

As Charles Wowkanech, president of the New Jersey AFL-CIO put it, what Christie does not understand is that “cuts in school aid, municipal aid and property tax rebates” constitute a real “tax increase for working families.”

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