Legislation sponsored by Assembly Democrats John F. McKeon, Celeste Riley, L. Grace Spencer, Albert Coutinho and Lou Greenwald to ensure shared sacrifice by New Jersey’s wealthiest residents, expand a tax break for senior citizens and boost funding for suburban schools shorted by the governor was approved today by the Assembly.
One bill (A-4202) would increase the income tax rate on millionaires and expand the income tax exclusion for pensions, annuities and other retirement income. It’s sponsored by McKeon, Riley, Spencer and Coutinho and was approved 46-32.
The other bill (A-4203) would provide school aid to about 365 districts consistent with the state’s school funding formula, which Gov. Chris Christie failed to follow in last year’s state budget, especially hurting rural and suburban school districts and their property taxpayers. It was approved 46-31.
“In these difficult times, we’ve seen working class and senior and disabled citizens bearing the heaviest burden, but a call for shared sacrifice should include all residents of New Jersey including the most affluent,” said McKeon (D-Essex).”The millionaire’s tax is a fair component to shared sacrifice.”
“The recession has decimated many people’s 401k’s and other investments,” said Riley (D-Salem/Cumberland/Gloucester). “This measure would help provide a little more peace of mind for those in retirement who are worried about being able to get by. Protecting senior citizens needs to a constant goal.”
“This governor and Republicans have continuously sided with millionaires over working class taxpayers,” said Spencer (D-Essex). “This is another chance for them to do the right thing and help support quality education and property tax relief. Democrats remain committed to quality education and property tax relief and we will keep fighting for it.”
“The governor and Republicans may prefer tax cuts for the rich, but Democrats prefer property tax relief for working class residents and a quality education for our children,” said Coutinho (D-Essex). “The governor’s policies have led to painful property tax increases and school cuts in our suburban and rural areas. It’s time to right that wrong.”
According to the Office of Legislative Services, more than 70 percent of the funding cut by the governor should have gone to rural and suburban school districts. The cut contributed to education cuts, layoffs and last year’s 4.1 percent property tax increase, the highest taxpayers have seen since 2007.
“The governor’s decision to ignore the school funding formula and threaten quality education for at-risk children has already been rebuked by the courts, and now we’re fixing the rest of his mistake,” said Greenwald (D-Camden). “Property taxpayers throughout our state are paying the price for the governor’s misguided policies, but taxpayers and schools in our rural and suburban communities are especially suffering under this governor. This bill begins to repair the damage wrought by the governor.”
The first bill would provide a two-year adjustment to the income tax rate for taxpayers with taxable incomes exceeding $1 million in taxable years beginning on or after January 1, 2011. The bill would increase the rate from 8.97 percent to 10.75 percent.
It’s estimated that 16,000 of New Jersey’s 8.7 million residents earn more than $1 million in taxable income. A family of four in New Jersey earning $1.2 million would pay an additional $11,598 as a result of the increased tax rate in this legislation.
The Office of Legislative Services estimates that the tax change for millionaires would generate about $676 million in year one.
It would also permanently expand the exclusion under the gross income tax for pensions, annuities and certain other retirement income for qualified taxpayers. At present, qualified taxpayers who are at least 62 years of age or disabled and who are eligible to receive Social Security payments and make $100,000 or less in annual gross income may exclude $20,000, $15,000 or $10,000 of various pension, annuity and retirement benefit income, depending on their tax filing status.
This bill would expand the exclusion by removing the $20,000, $15,000 and $10,000 exclusion caps, and providing full exclusions for qualified taxpayers with gross income less than $100,000. The bill also would provide new limited exclusions for qualified taxpayers with incomes between $100,000 and $110,000. With this new exclusion, the excluded amount would reduce in proportion to the amount of the taxpayer’s gross income that is above $100,000. TLS.