Tags: new | jersey | millionaires | tax

New Jersey Battles Over Tax on Millionaires

Sunday, 20 Jun 2010 11:22 PM

 

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PHILADELPHIA – New Jersey politicians are due to battle on Monday over whether to slap a tax on millionaires or cut services for low-income senior citizens and the disabled.

The clash in the state legislature is part of a wider battle over how to erase a $10.7 billion budget deficit and is emblematic of the decisions facing states across America whose budget deficits have soared during the recession.

Democrats want to re-impose a one-year tax on millionaires that has been vetoed by Republican Governor Chris Christie. The 10.75 percent tax on income above $1 million would hit 16,000 people, some of them likely to work as financial professionals just across the Hudson River in New York.

Both houses of the legislature, which are controlled by Democrats, previously approved the tax in May but it was immediately vetoed by Christie, who has pledged not to raise taxes.

The tax would raise $637 million that the state would use to fund rebate checks of up to $1,295 for some 600,000 senior citizens who would otherwise face steep increases in their property taxes during fiscal 2011.

According to the nonpartisan Office of Legislative Services, a retired couple living on a fixed income of $40,000 would see an increase of $1,320 in taxes under the governor's plan while a family making $1.2 million would receive a tax cut of $11,598.

"Governor Christie's heartless vetoes denied property tax relief to senior citizens struggling to make ends meet," Assembly Majority Leader Joseph Cryan said in a statement.

The governor vetoed the tax because it would deter hiring, Christie spokesman Michael Drewniak said.

"These are the people who invest in New Jersey," Drewniak said. "That's where a lot of the hiring and the business expansion would come from."

Cryan appealed to the minority Republicans to join Democrats in Monday's vote after the original legislation passed by 46 to 32, along party lines. Democrats need 54 votes to override a veto.

Senate President Stephen Sweeney said he would immediately hold a vote in the Senate if the override is passed in the Assembly. If it succeeds, the override would be the first since 1997.

Two months after taking office in January, Christie announced cuts to hundreds of state programs and spending reductions in every department, calling New Jersey's budget hole a "grand canyon."

In his May 20 veto of the tax, Christie said the bill would have represented the 116th increase in taxes in the last eight years.

New Jersey's shortfall, at 37.4 percent of the current year's budget, is the second-highest among U.S. states behind Nevada, according to the Center on Budget and Policy Priorities.

© 2014 Thomson/Reuters. All rights reserved.

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