Is this a fair share? Taxes paid by NJ’s poor, rich and middle class
A new study finds middle class families in New Jersey are continuing to face an uphill struggle just to make ends meet.
The Who Pays analysis, released by the Institute on Taxation and Economic Policy and the progressive New Jersey Policy Perspective, finds families with annual incomes in the $40,000 to $80,000 range are paying more than their fair share of taxes.
“They are still having to pay a higher share of their income in state and local taxes than is true for the state’s richest 1 percent,” New Jersey Policy Perspective President Gordon MacInnes said.
He noted if you consider all of the various taxes and fees, it’s lower-income families “that have the greatest tax burden in New Jersey. And this is a high cost state to begin with — and it’s a little unfair, I think.”
MacInnes said the study also finds New Jersey has started taking steps to improve its tax code by increasing the Earned Income tax Credit for struggling working families. The tax rate for people earning more than $5 million a year also has been increased.
But he said more needs to be done to lower the cost of public colleges, improve NJ Transit and lower property taxes — all of which is a hit on lower and middle class families.
To pay for this, MacInnes said the state could increase the sales tax back to 7 percent, which he estimated would generate about $700 million a year. He also suggested raising the tax on people making a $1 million a year.
“We could triple practically the amount of money that modest increase will bring in, and move it from $250 million to closer to $700 million."
He said another way to generate revenue for the state is to restore the estate tax, which was eliminated for this year. Republicans opposed keeping the estate tax — as they do raising the millionaire's tax — because they said it encouraged wealthier residents to leave the state, taking their taxable income with them.
“The problem with that is that the conclusion is not documented by the facts," MacInnes argued.
He said it is true there is a very slight exodus taking place, but the effect is very modest — in the range of
“hundreds of millions or a billion dollars, but you’re talking about a state where there’s a total income of $500 billion.”
You can contact reporter David Matthau at David.Matthau@townsquaremedia.com