“As the attached news article shows, the state of New Jersey will receive a windfall of more than $350 million thanks to Governor Cuomo’s plan to eliminate the millionaire’s tax.
This is another demonstration of the fundamental unfairness of the Governor’s budget approach.
Slashing education funding and eliminating prescription drug coverage for seniors while giving millionaires a tax break is unconscionable.
The notion put forward by the Governor that doing so will help make New York more competitive is wrong. As this article shows, it is New Jersey that will be able to drive more resources to its schools, improve education and become more competitive, not New York.”
Sunday, March 6, 2011
N.Y. Gov. Cuomo may put $350M in N.J.’s coffers
BY JARRETT RENSHAW
TRENTON, N.J — New Jersey may soon get a significant boost in income tax revenue from its wealthiest residents without having to raise their taxes — all courtesy of New York Gov. Andrew Cuomo.
The bump in revenue depends on whether Cuomo continues to have his way in Albany and lets an income tax surcharge on the wealthiest residents — including New Jersey commuters — expire at year’s end.
That move would bring about $350 million to New Jersey’s budget in 2013, according to an Office of Legislative Services memo obtained by The Star-Ledger.
Cuomo’s proposal would set New York’s rate on top earners significantly below what New Jersey charges its wealthiest. The two states now have the same 8.97 percent top rate, but Cuomo wants to drop New York’s rate to 6.85 percent.
New Jerseyans who commute to the Empire State pay income taxes to New York but get credit for their payments on their New Jersey tax returns, avoiding a double charge. If New York’s top rate drops below New Jersey’s, high-salaried commuters would pay the difference to the Garden State.
The OLS memo noted New Jersey’s budget lost more than $300 million when New York boosted its tax in 2009. New Jersey Republicans are likely to use the memo to help counter efforts by Democratic lawmakers to implement a millionaires tax. They argue New Jersey should keep the status quo because the New York plan would bring the state more money without raising taxes on anyone.
State Sen. Shirley Turner (D-Mercer), who has proposed a bill that would permanently raise the tax rate on households earning more than $1 million a year, said the issue is more than just dollars and cents. “It’s really about fairness,” she said. “This governor has coddled the wealthy, but they need to pay their fair share.”
Under Turner’s bill, every dollar earned above $1 million would be taxed at 10.75 percent, and the money would be dedicated to property tax relief. The bill has yet to be endorsed by Democratic leadership.
If Turner’s bill is enacted and New York lets the surcharge expire, the top rate for New Jersey residents earning more than $1 million would be nearly 40 percent higher than New York’s.
Turner said the disparity would not concern her. “The problem in this state is not income taxes. It’s property taxes, and that’s why people are leaving,” said Turner.
Republican Gov. Chris Christie last year vetoed a millionaires tax bill Democratic legislative leaders said would generate more than $600 million, and he vows he would do it again.
The Christie administration is reviewing details of the OLS memo on the New York tax before making any public comments, Treasury spokesman Andy Pratt said.
Cuomo, a Democrat, has promised not to increase or establish any taxes to get his state out of its $10 billion deficit. He has said his view of a tax hike includes renewing the income-tax surcharge on people who earn $200,000 or more a year. It is set to expire at the end of this year, but Democrats and labor leaders have called on Cuomo and lawmakers to renew the tax, arguing the money is necessary to help with funding for schools, police and firefighters.
Workers rallied in Albany last week to persuade lawmakers to keep the tax in place. New York collects an additional $4.6 billion a year because of the income-tax surcharge.