NJEA Executive Director Ed Richardson joined the Better Choices Coalition today as the group warned against the proposed Transportation Trust Fund (TTF) deal. The deal increases the state’s gasoline tax by 23 cents and eliminates the estate tax, among other revenue reductions that harm the state’s poorest residents and benefit the wealthiest. The proposed deal could damage New Jersey’s budget for years to come.
Below is the full text of Richardson’s remarks:
“As someone who travels all over the state, I know our infrastructure is in bad shape, so I am totally on board with investing to make New Jersey commuters safe. Increasing the gas tax makes sense.
“But it’s irresponsible to negotiate a deal that raises this tax while reducing other state revenues. Estimates show that by 2021, the tax cuts in this proposal will reduce state revenue by $1.4 billion a year. This comes at a time when essential services that support our most vulnerable residents—struggling families, public school children—are NOT being funded.
“To make matters worse, the tax cuts in this deal disproportionately benefit the governor’s wealthy friends. The only break targeted to help low-income New Jerseyans—the Earned Income Tax Credit—represents about four percent of the tax cuts. The rest of this package skews toward high-income residents. That’s not ‘tax fairness;’ it’s welfare for the wealthy!
“The most absurd piece of this deal is the elimination of the estate tax. This is one of the state’s most progressive taxes: impacting those who can afford to pay, and sparing poor and middle class families. Of the approximately 70,000 people who pass away annually in New Jersey, fewer than 4,000—about 5 percent—owe any estate tax. These estates—worth more than $675,000—belong to New Jersey’s wealthiest households.
“In fact, 60 percent of estate tax collections come from estates worth $3 million or more. This revenue has been growing every year, too, which debunks the claim that people are fleeing New Jersey to avoid these taxes.
“Welcome to Christie’s version of Robin Hood—steal from the poor to give to the rich.
“And who has been complaining about the sales tax, anyway? At 7 percent—with exemptions for essentials like food and clothing—New Jersey’s sales taxes rank 23rd among the states, that’s about average.
“To consumers, the proposed cut is almost meaningless: a fraction of a cent on a cup of coffee at Starbucks. But in the state budget, it’s huge, because the sales tax is the largest revenue source. So even a three-eighths of a cent cut is devastating—it’s almost half of the hole being dug into the budget here.
“While raising the retirement benefit threshold may seem like good news for our retirees, the loss of revenue is a reason for serious concern, especially for people whose pensions have not been funded by the state for 20 years. Think about it: What good is an exclusion from taxes on pension income if your pension disappears? Unfortunately, this deal combined with decades of pension underfunding makes a bankrupt pension fund more likely.
“NJEA strongly believes the state should focus on generating new revenues to help meet its current obligations before it can begin reducing any existing revenues.
“New Jersey public employees currently pay an average of 22 percent of their health care premiums; their mandatory pension contributions have more than doubled; and many have seen their take-home pay greatly reduced. While public workers have made these sacrifices, the state has failed to fix our state’s structural budget deficit and is putting at risk the future retirement security of hundreds of thousands of public workers who belong to our state pension systems.
“Someone nicknamed this ‘Frankendeal.’ That’s appropriate—it was cobbled together from pieces of other dead deals; it’s way too big, and it’s dangerous to the future of New Jersey.”