Today, members of the Better Choices for New Jersey campaign issued the following letter to the New Jersey Legislature detailing what a real budget that puts working families first would look like. If you agree with us, you can take action by clicking here to write your legislators.
June 10th, 2015
To the New Jersey State Legislature:
We the undersigned write, as members of the Better Choices for New Jersey coalition, urging you to pass a budget that puts the people of New Jersey first. New Jersey’s economy is fundamentally out of balance due to five years of failed fiscal policies that have given billions in tax cuts to the state’s wealthiest residents and corporations while forcing struggling families to pay the price.
Since January our coalition has made it clear that New Jersey can no longer continue to balance the state budget on the back of working families. And it must stop.
In the past five years less there has been insufficient investment in our schools, to fix our roads and bridges, to ensure access to health care, to provide affordable housing, to protect our environment, and to create good, green jobs. New Jersey residents are paying more in tuition, transit fares, property taxes and fees while getting less for what we pay.
We are on an unsustainable path illustrated, for example, by the rise of poverty in New Jersey, in particular childhood poverty, while the state has raised taxes on the working poor through cuts to EITC and federal SNAP benefits. And the only income bracket to see increases are those top earners of the state. Our state cannot succeed if we continue to hurt those most vulnerable and keep working family wages stagnant.
We have forgone necessary revenue to provide essential state services and meet the state’s fiscal obligations. This must stop. The New Jersey Legislature must act decisively with a unified voice to support the people of New Jersey and pass a budget that prioritizes and invests in the true economic engine of our state: our working families. This is necessary for our working families and to put New Jersey back on the path towards economic growth.
Accordingly, the signers of this letter urge the following included in the FY2016 budget:
Reinstatement of the ‘millionaire’s tax’ that sunset in 2010. We know based on empirical evidence that this provides much needed revenue to the state for use in property tax relief. With unmet pension obligations, underfunded public education, decreased property tax rebates and stagnant municipal aide, we know that we need money for the PTRF. The renewal of this tax would provide approximately $800 million for these important obligations.
Restore the Earned Income Tax Credit to 25% of the Federal level, thus providing people living on the edge additional money which in turn goes back into the economy. Rutgers University Professor William Rodgers recently demonstrated that the state weakened its own economic recovery by cutting EITC. We must correct this inequity and restore EITC. The state investment would require approximately $60 million.
Implement Combined Reporting for corporations located in New Jersey. This method of tax collection is a standard used by many states, providing the states with tax revenues based on total corporate earnings rather than those just from within the state. It is a fair business practice that produces much needed corporate business tax revenue. Shifting to combined reporting would raise at least $235 million, and as much as $470 million, a year.
Reconsider the implementation of the six year corporate tax cut plan. FY16 will be the sixth year of decreasing taxes on corporations and our CBT revenues are showing the negative impact. We recommend freezing the 6th year of cuts and implementing a CBT surcharge of 25% in the FY16 budget. This would provide a total of over $700 million (approximately $665 million from the surcharge and about $43.5 million from the pausing of the phase-in). Enacting this surcharge in concert with Combined Reporting could generate an additional $71 million to $142 million.
Utilize the Legislative authority provided in contracts between the Economic Development (NJEDA) and corporations receiving tax incentives to suspend corporate tax breaks for the FY16 year. The language in contracts administered by the NJEDA is provided precisely to give the Legislature the authority to determine whether the state can afford to forgo the revenue loss brought about by these incentive programs. Given that we cannot meet basic financial obligations to the people of New Jersey right now, we cannot claim that these tax breaks to large corporations are affordable. Suspending the FY16 tax breaks would bring approximately $335 million in additional revenue.