New Jersey and taxes: An unfriendly alliance about to get worse

| 29 Sep 2011 | 08:55

    TRENTON - Taxes are an essential part of New Jersey. The state has the nation’s highest property taxes, the fifth highest corporate taxes, and ranks No. 15 and No. 16, respectively, in income and sales taxes. Faced with a huge budget deficit, Gov. Jon S. Corzine is proposing nearly $2 billion in tax increases along with $2.6 billion in program cuts, but Democrats have been searching for ways to avoid tax hikes. ``Most families here in New Jersey find it difficult enough to afford exorbitant property taxes, the high cost of gasoline and the soaring cost of living,’’ said Assemblyman Paul Moriarty, D-Gloucester. ``Asking them to accept more tax increases is like asking a camel to take the straw that will eventually break its back. People have had enough.’’ But with a July 1 constitutional deadline to approve a budget fast approaching, Corzine hasn’t wavered from his $31 billion budget plan. But exactly what new taxes and spending changes might New Jerseyans face? No one knows for certain. Here are the proposals that have gained the most traction: * Corzine proposed hiking the sales tax from 6 percent to 7 percent to raise $1.1 billion. Though Senate Democratic leaders support the plan, other Democrats, particularly in the Assembly and especially Roberts, have no such enthusiasm. But no one has yet figured out how to make up the money that would be lost should that proposal be dumped. However, it does seem likely the sales tax will be expanded to more services, whether it be attorneys and accountants or golf and health clubs. Some think expanding the sales tax to services such as attorneys would generate so much money it could allow lawmakers to cut the rate to 5 percent. * Alcohol, cigarette, car and land sale tax increases and state police patrol fees. Corzine’s proposal to increase taxes on these items have sparked little legislator opposition, except for the alcohol tax that appears dead. Towns with free state police patrols may soon pay for them, though Republicans contend that would further boost property taxes since those are used to pay for municipal services. * Corporate taxes. Corzine wants to assess a surcharge on corporations to raise $60 million. Businesses haven’t opposed this because Corzine is letting other corporate taxes that raise $400 million yearly expire. * The pension contribution. Corzine wants to contribute $1.3 billion to the public employee pension fund, but many lawmakers contend that’s too much. Corzine will demand some contribution, but it could turn out to be less. Less popular proposals: * Property tax rebates. Corzine proposed boosting them 10 percent, but they may well stay at last year’s level. * Medicaid co-payments. Corzine wants to raise $13 million through a $2 co-payment on Medicaid prescription drugs, but Democratic Assemblyman Joseph Cryan said ``I don’t think there’s anything worse in the budget.’’ * Corzine’s $1,400 per month hospital bed tax. The governor wants to use the tax to help hospitals treat the uninsured, but the plan has bipartisan opposition and is dead. * The water tax. Corzine wanted to raise $12 million by taxing public water, but legislators rejected it. * Atlantic City casino taxes. Some Democrats want to extend casino taxes to retain $42.5 million, but the idea hasn’t gained traction and Corzine won’t consider them. * 15 percent state worker pay and benefits cut. Three Democrats have floated this idea, which state worker unions have bashed. Corzine contends reopening state worker contracts now is unrealistic, but supporters could raise it again within the next year. * An income tax increase. No one has publicly supported one, though some Democrats would rather see income taxes increased than sales taxes.