Press of Atlantic City

Trenton OKs Tax On Rich

Press of Atlantic City — Tuesday, June 22, 2004

By DEREK HARPER
Staff Writer

TRENTON — The state Legislature on Monday approved the so-called "millionaire's tax," a cornerstone of Gov. James E. McGreevey's package of tax-reform measures.

The millionaire's tax is part of Fair and Immediate Relief, or FAIR, a four-bill package designed to cut the state's reliance on property taxes.

Other bills passed included a cap on the amount schools and towns could raise in their budgets in a given year and the creation of a task force to investigate how a constitutional convention could change the state's property-tax system.

"This is a victory for nearly all of New Jersey, especially our senior citizens and hardworking middle class families," McGreevey said. "We are providing immediate relief for those who are hardest hit by ever-increasing property taxes.

"At the same time, we are setting the stage for more far-reaching reforms."

Some Republicans think otherwise: They argue that FAIR will drive business out of the state and unfairly penalize the wealthy.

"I think it comes out of the Soviet Union and the Marxist redistribution of wealth," said Assemblyman John E. Rooney, R-Bergen, while Assemblyman Joseph Pennacchino, R-Morris, Passaic, called it a "cynical attempt to redistribute the state's wealth."

State lawmakers last week decided to tie the caps to the tax, which also expands the Homestead Rebate and NJ Savers programs.

The legislation raises to 9 percent the income tax on people earning more than $500,000, and take in about $800 million from 28,000 people. The state's current highest tax rate is 6.37 percent on New Jersey residents earning more than $75,000.

Homestead Rebates would increase from $775 to $1,200 for seniors and the disabled, Democrats said. NJ Saver rebates now averaging $200 would jump to between $500 and $800, they said.

The measures would help most people, said Assemblyman Jeff Van Drew, D-Cape May, Cumberland, Atlantic.

The Legislature also passed bills that lower the percentage municipalities and schools can raise their budgets. Municipalities now have a 3.5 percent spending cap, down from 5 percent, while schools have a 2.5 percent cap, down from 3 percent.

School districts and municipal officials oppose the caps, saying the bills don't make allowances for increases in items such as fuel costs over which they have no control.

Republicans criticized the measures, calling it hypocritical that the Legislature reduced the amount that local governments can raise in their budgets, while pondering a budget that increases spending by between 12 percent and 15 percent.

"It's do as I say, not as I do," Rooney said.

Rooney also said there is no provision for capping the salary increases of teachers, police and other taxpayer-funded positions.

Senate Republicans argued that Democrats could do better for residents by controlling spending and offering real property-tax relief. They could best do that by controlling a proposed state budget.

"The more money government raises, the more government hungers to spend money," said state Sen. Gerald Cardinale, R-Bergen. "If our spending priorities are in order, we would not need to raise more money."

But state Sen. Wayne Bryant, D-Camden, said that the state is only asking for a few hundred dollars more from wealthier residents benefiting from federal tax cuts. Those dollars would help senior citizens struggling to buy food or keep the homes in which they've lived for 40 years.

"When you go to church and hear 'let's do more for the least of us,' we give it some meaning," Bryant said.

Staff writer Thomas Barlas and The Associated Press contributed to this report.

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