Newsday

Groups Propose Income Tax Hike For The Rich

Newsday — Wednesday, March 26, 2003

By KATHY HENNESSY
Associated Press Writer

TRENTON, NJ — A group of special interests wants to restore Gov. James E. McGreevey's proposed budget cuts by imposing a temporary tax hike on the state's wealthiest residents, despite the governor's vow not to raise taxes.

The Fairness Alliance wants to increase income taxes for the wealthy for the next three years. They argue the rich pay a disproportionate share of the tax burden and feel less sting when cuts are made to education, social service programs and prescription drug coverage.

"We are fighting to make the tax system fairer so budget cuts hurt less," said Staci Berger of New Jersey Citizen Action, a member of the coalition.

The tax expands on a so-called "millionaire's tax" proposal that has been pushed by Assembly Speaker Albio Sires, D-Hudson, but has received little support from lawmakers. The group has not yet lobbied legislators for support of the tax.

A spokesman for McGreevey said it's not the right time for a tax increase.

"We share their goals which are all worthwhile but the governor has made it clear that raising taxes is not something that is on his agenda," Micah Rasmussen said.

But coalition members, who represent more than 75 special interest groups, believe the political climate may be changing.

"We take him at his word but we don't necessarily take his word that there will be no tax increase," said coalition member Jon Shure of New Jersey Policy Perspective.

The proposal would increase the tax rate to 7.5 percent for families making more than $400,000 a year and individuals who earn more than $250,000 annually. Those who earn more would pay a higher tax rate.

The three-year increase in the tax would raise an estimated $972 million a year based on 2001 tax collections, Shure said. It would effect about 50,000 households or 1.9 percent of New Jersey taxpayers.

It also offers a break to lower income families by exempting households that earn less than $25,000 from paying state income tax. Currently, families that earn less than $20,000 do not pay the tax.

The budget proposed by McGreevey includes sharp cuts across all levels of state government. It slashes funding for higher education, state-subsidized health insurance for the working poor and the arts.

Social service and senior organization have said the cuts could be devastating to the most vulnerable citizens.

"Those most in need should not have to make most of the sacrifices," said Muriel Berman of the United Seniors Alliance.

Municipalities are also feeling the pinch, said Maplewood Mayor Victor DeLuca.

"We have no choice but to raise property taxes to provide the same services we have today," DeLuca said.

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