The Star-Ledger

Boost In Income Tax Urged To Ease Budget Cuts' Pain

The Star-Ledger — Thursday, March 27, 2003

Star-Ledger Staff

A coalition of 79 groups representing thousands of teachers, union members, senior citizens, minorities, mayors and others launched a campaign yesterday to pressure state officials to raise the state income tax by $1 billion a year for high-earning taxpayers to avert deep budget cuts.

"We are fighting to make the tax system more fair so the budget cuts hurt less," said Staci Berger, program director for NJ Citizen Action, which helped organize the "Fairness Alliance" coalition.

The alliance plans to lobby lawmakers and eventually may launch a media campaign to pitch what has been described as a "millionaire's tax."

However, the group faces an uphill battle because Gov. James E. McGreevey opposes the plan, and lawmakers are reluctant to raise taxes during a legislative election year.

"There's no question that we share the goals of these groups, that we understand their concerns. But the governor's not going to raise sales, income or business taxes," said McGreevey spokesman Micah Rasmussen.

Republican State Committee Chairman and Sen. Joseph Kyrillos said that "raising taxes during an economic downturn is reckless and short-sighted."

There is support for a higher income tax for the rich among some lawmakers in both parties, notably Assembly Speaker Albio Sires (D-Hudson) and Sen. Leonard Connors (R-Ocean). A recent Star-Ledger/Eagleton-Rutgers poll that found 74 percent of voters would support higher income taxes on families earning $500,000 or more.

Members of the new coalition are rallying behind a plan first proposed by New Jersey Policy Perspective. Currently, New Jersey's income tax, which is graduated, has a top rate of 6.37 percent. The alliance proposal would raise the rate to 7.5 percent for families earning $400,000 to $600,000; to 8.5 percent on families earning $600,000 to $1 million, and to 9.5 percent on families earning more than $1 million. These rates would expire after three years.

The increases would provide the state with an estimated $972 million and affect about 50,000 households, fewer than 2 percent of all taxpayers. At the same time, the group wants to exempt 232,000 more low-income taxpayers from paying any state income taxes.

Sires said the Alliance proposal may be too broad to win legislative support, particularly in an election year. He said that at this point, even he is inclined to support a higher income tax only on taxpayers earning $1 million or more.

Coalition members say cuts in McGreevey's proposed $23.7 billion budget would cause too much pain for poor families, senior citizens, arts groups and others. They said they do not yet have a legislative sponsor lined up for their income tax proposal.

"We need to do whatever is necessary to see that this budget does not pass," said the Rev. Reginald Jackson, executive director of the Black Ministers' Council of New Jersey. He said the cuts would be unjust, particularly when wealthy taxpayers benefited most from the 1990s stock market boom, as well as state and federal tax cuts.

Several of the state's largest special interest groups belong to the coalition, including the New Jersey Education Association, the New Jersey State League of Municipalities, the United Senior Alliance, and several chapters of the Communications Workers of America, the state's largest public worker union.

Their plan was instantly denounced by Americans for Tax Reform, a Washington-based group that opposes higher taxes.

"Raising the state income tax will devastate small businesses and their employees, lead to an outmigration of residents, exacerbate the state's budget problems, while providing no property tax relief for middle-income school districts," said policy analyst Daniel Clifton.

In another budget-related action yesterday, McGreevey sent a letter to New Jersey's members of Congress asking them to press for more federal funds for security purposes. State officials say extra security measures cost $125,000 a day in police overtime and other costs.

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