Dueling Tax Plans in NJ

As New Jersey Gov. Chris Christie unveiled a package of 33-bills on Monday to cap state spending in order to reduce property taxes, Democratic lawmakers laid out their proposal to raise income taxes on millionaires for one year to give relief to seniors.
The dueling tax plans come just 51 days before lawmakers are constitutionally required to pass a balanced budget.
The crux of Christie's plan includes a 2.5 percent limit to property tax increases that would requires an approval by voters to exceed. The package of bills also includes caps on increasing public employee contracts — including wages, health benefits, vacation time and other perks — and limiting the amount of unused sick leave they can cash out at $15,000. Another proposed change would be allowing workers to only carry over unused vacation time for one year.
Democrats, who accuse Christie of presenting a budget proposal that protects the rich, announced their intention to try and reinstate a tax on the wealthy.
"When the governor talks about shared sacrifice I think we all get it, and we all agree," Senate President Stephen Sweeney said. "But shared sacrifice means 100 percent of us share in the sacrifice, not 99 percent."
A levy on those making more than $400,000 per year expired in December. Democrats are now looking to reinstate the increased tax those making $1 million and more, or approximately half a percent of New Jersey taxpayers, but Christie still opposes it.
Democrats want to use the money collected from the tax surcharge to restore property tax rebate checks for seniors and eliminate a new $310 deductible and increased prescription copays for seniors and disabled citizens that Christie has put forward as part of his budget.
According to the Office of Legislative Services, increasing the tax for those making $1 million or more — an estimated 16,000 taxpayers — from 8.9 to 10.8 percent would raise $637 million next year. Those making $2 million would pay nearly $18,000 more a year as a result, and would pay $18,000 more in taxes for each million they make.
"There is an enormous difference between the two approaches," Christie said as he accused Democrats of proposing short-term plans instead of coming up with long-term solutions.
Union leaders have criticized many of the governor's proposals, doubting that they will save much money. They also fear that allowing towns to opt out of civil service requirements will open the system to more hiring decisions based on patronage.
The state's largest teachers union, the New Jersey Education Association, has been battling with the governor for months over school funding, and says the cap on raises for public servants would push people out of those careers.
For instance, NJEA spokesman Steve Wollmer said, if teachers had received 2.5 percent pay increases over the last 40 years, the average New Jersey public school educator's salary would be under $24,000. In reality, he says, teachers here make an average of about $61,000.
While a 2.5 percent pay increase might be OK in times like these when inflation is low, it could hurt in the long run.
"You're losing ground," Wollmer said.
Bill Dressel, executive director of the New Jersey League of Municipalities, said he's worried that the two sides were becoming so politically entrenched that none of the bill would advance.
"We're really looking for a Rolaids bill — anything that will spell relief," he said.

Copyright AP - Associated Press
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