The Senate on Thursday approved legislation authored by Senate President Steve Sweeney that would increase the tax on millionaires for four years and restore the Earned Income Tax Credit to give the working poor a tax cut.

“We are asking the wealthy to pay their fair share so that the state can meet its financial obligations and help restore the fiscal stability that is needed to get New Jersey’s economy moving,” said Senator Sweeney. “Middle class families and working people will be protected against any increase. Every income group has seen their buying power decrease in recent years, except for millionaires, who have continued to prosper while everyone has struggled in a difficult economy.”

The bill, S-2918, was approved by the Senate with a vote of 24 to 16. Approved earlier today by the Assembly, the bill now goes to the governor.

If New Jersey revenues had grown at the national average, annual state revenues would have been $4.7 billion higher in FY 2013, the Office of Legislative Services reported – enough to meet the state’s pension funding obligation, with money left over to invest in transportation, higher education and other priorities.

“No one likes to increase any tax, and it would not be necessary to do so if New Jersey did not rank near the bottom in economic performance, revenue and job growth under the Christie administration,” Senator Sweeney said.

Senator Sweeney’s bill also would restore the state’s Earned Income Tax Credit to 25 percent of the federal credit. The Christie administration cut it to 20 percent in 2010. Eligibility for benefits ranges from $20,330 for childless workers to $53,267 for wage earners with three or more children, the lower- and middle-income groups whose take-home pay has been hit the hardest since the Great Recession.

“These are hard working men and women who struggle to support themselves and their families even while working full time or holding multiple jobs,” said Senator Sweeney. “They need a tax break the most.”

Restoring the full EITC would cost about $60 million a year, according to OLS projections.

The legislation would:

– Increase the income tax rate on income above $1 million from the current 8.97 percent to 10.75 percent for four years.

– The modest increase of two cents on each dollar earned over $1 million will generate approximately $675 million in additional revenues for the state for Fiscal Year 2016.

– The increase would affect 17,000 people who earned more than $1 million and who rank comfortably in the top 1 percent.

– From 2010 to 2012 every income group has seen the buying power of their take-home income decline, with the exception of millionaires who have gained an average of $123,000.

– The surcharge would expire at the end of 2018.

[TLS]