Category Archives: Millionaire’sTax

United for a Fair Economy Applauds Obama Revenue Proposal

FOR IMMEDIATE RELEASE


Boston, MA (September 20, 2011): United for a Fair Economy (UFE) applauds President Obama’s proposal to raise $1.5 trillion in revenue by increasing taxes primarily on the wealthiest one percent of taxpayers and corporations. Over the last decade, the richest Americans have seen their income and wealth soar while benefitting from sharply reduced taxation.

“At a time of unprecedented economic inequality, extensive unemployment, and deep concern over our country’s long-term fiscal health, it is entirely appropriate and economically sound to institute progressive taxation as the best solution to our nation’s challenges,” said Lee Farris, senior organizer on federal tax policy at United for a Fair Economy.

President Obama’s proposal seeks to let the Bush tax cuts expire for upper-income taxpayers, close corporate tax loopholes, end oil and gas subsidies, and limit the amount that high earners can deduct. According to Citizens for Tax Justice, only the richest five percent of taxpayers would pay additional taxes under Mr. Obama’s proposal, with 75 percent of the increases paid by the richest one percent.

United for a Fair Economy especially supports President Obama’s proposed “Buffett Rule,” that would establish a minimum tax on taxpayers making $1 million or more in income, and would limit the benefit they receive from the 15 percent tax rate on investment income.

“People making more than $1 million a year should not pay a smaller share of their income in taxes than middle-class families pay,” said Farris.

UFE is encouraged that the President vowed to veto any deficit reduction package that cuts benefits to Medicare recipients but does not raise taxes on the wealthy and big corporations.

Given UFE’s decade-long campaign for a robust estate tax, UFE views the President’s proposal for the estate tax to return at its weakened 2009 level as a missed opportunity to raise much-needed revenue from multi-millionaire inheritors to improve our nation’s fiscal health.

United for a Fair Economy urges Americans to tell Congress to reform our tax code so wealthy individuals and large corporations pay their fair share. We support the tax package developed by Rebuild the Dream, which includes taxing capital gains and investment income at the same rate as income from wages, new higher tax brackets for millionaires and billionaires, a stronger estate tax, and ending offshore tax havens for corporations and individuals. UFE also supports HR 1124, the Fairness in Taxation Act.

United for a Fair Economy is a national, independent, nonpartisan, 501(c)(3) non-profit organization located in Boston, MA, which works to rein in economic inequality and promote a more broadly shared prosperity. More at www.faireconomy.org.

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Filed under Buffett Rule, Bush Tax Cuts, Fairness in Taxation Act, Millionaire'sTax, President Obama, press release, United for a Fair Economy

As A Matter Of Fact…Budget vetoes: The scorpion and the frog

July 6th, 2011 | Published in NJPP Blog: As a Matter of Fact …

By Mary E. Forsberg, Research Director

A scorpion and a frog meet on the bank of a stream and the scorpion asks the frog to carry him across on its back. The frog asks, “How do I know you won’t sting me?” The scorpion says, “Because if I do, I will die too.”

The frog is satisfied, and they set out, but in midstream, the scorpion stings the frog. The frog feels the onset of paralysis and starts to sink, knowing they both will drown, but has just enough time to gasp “Why?”

Replies the scorpion: “It’s my nature…”

This parable has many variations: the scorpion and turtle; the snake and dog; the viper and farmer. What each variation has in common is a bad actor, a character who can’t play fair, even if it means he might perish.

Those who are reading the press these days may recognize certain similarities with the current state of politics in New Jersey. And the Democratic leadership surely is croaking now.

It wasn’t a surprise that the governor wielded his ax against the Millionaires’ tax and women’s health programs. He did it before. He said he would do it again and he did it.

What was surprising, though, were the other cuts that had nothing to do with policy and everything to do with the very nature of his leadership. The cuts are unprecedented and go beyond any reasonable policy and fiscal considerations.

The Legislature

The budgets of the Executive office, the Legislature and the Judiciary have always been sacrosanct; a “gentleman’s agreement” has traditionally given each responsibility for its own budget and spending.

No governor before has chopped 41 percent from the Legislature’s staff salary accounts, but that’s exactly what the governor did. And he did it with a dose of venom, saying:

“The budget as adopted by the Legislature relied upon exaggerated revenue estimates, flawed assumptions concerning fund balances and ignored the harsh reality of its spending decisions. This reduction, among many others enumerated herein necessitated reductions of known surpluses, imprudent spending and other excesses.”

People who have noticed this salary cut haven’t made much of it. But the fact is, it has the potential to shift the balance of power in the legislative branch. Here’s how that works.

The salary accounts that the governor cut will not affect the salaries of legislators or those of their district office staff. The ones cut supported the Democratic and Republican legislative committee aides and the people who run the partisan staff offices in Trenton. Money for those salaries is appropriated to the Senate and Assembly in a lump sum and is divided based on which party is in the majority – the majority party (currently the Democrats) gets more of the money, has a bigger staff and has the larger suite of offices.

Unless the Legislature overrides this veto with a 2/3 vote (which would require the support of both parties), the staff of those offices will be significantly reduced. How these cuts are shared will be up to the majority Democrats in the Senate and Assembly. And as Assembly Speaker Oliver, a Democrat, was quoted as saying, “I’m certainly not going to shoot myself in the foot.”

Whether the governor understands this or not, a greatly reduced Republican partisan staff in Trenton is certainly a possible outcome of this line item veto.

Higher Education

Students and institutions of higher education felt the sting of the governor’s veto, which cut full-time and part-time Tuition Aid Grants (TAG) below even his own budget recommendation in March. He reduced the Democrats’ appropriation by $48.5 million, even though the amount in the Democrat’s budget was only $21.3 million more than his budget recommended.

In another unusual veto, the governor reduced the number of state-funded positions at each college by nearly 1,200 positions overall. This veto is an easy one to overlook and understanding it isn’t straightforward. What it means, however, is that the governor is reducing the state’s obligation to pay fringe benefits costs for these positions and is transferring those costs to the colleges – all without prior consultation and at the last minute. It is a backhanded way of again reducing the state’s responsibility for its higher education system. For Rutgers University and the Agricultural Experiment Station, this represents a 6 percent loss; for the other colleges, a 5 percent loss.

The veto message was again venomous. He blames the Legislature for this cost shift, saying:

“The Legislature’s failure to appropriately fund health benefit costs for all state employees necessitated a reduction in the state’s support of employee fringe benefits at all public institutions of higher education.”

Legal Services to the Poor

If you are poor in New Jersey and have a legal problem, save it until next year – maybe. Like the TAG scholarship, legal services will be significantly less than even what the governor proposed in his March budget.

His veto eliminated all state funding ($600,000) for the legal clinics at Seton Hall University Law School, Rutgers Newark Law School and Rutgers Camden Law School. In March he budgeted each of them for $200,000 apiece.

He also apparently took umbrage at the additional $5 million included by the Democrats in their budget for Legal Services of New Jersey, which provides legal services to poor people in civil matters. He cut that budget by $10 million – leaving Legal Services of New Jersey with a smaller budget than he recommended in March.

Cleaning up New Jersey

The Governor’s veto cut $18.8 million or 16 percent of the amount he recommended in March for Department of Environmental Protection programs that safeguard and preserve the state’s environment – for remediation of hazardous waste, underground storage tanks, monitoring water, and dealing with diesel pollution. Funding for these programs comes from a 4 percent constitutional dedication of corporate business tax (CBT) revenues. The effort by the governor and some in the Legislature to ensure that New Jersey is “open for business” by doing away with regulations and reducing corporate taxes means less money is available to protect New Jersey’s environment.

The moral of the budget

No one expected the governor to move away from his ideological position on funding health care for women or to abdicate his protection of the wealthiest in the state from the Millionaire’s tax, which would have added an additional 1.78 percent to their income tax bills this year.

But the veto message this year went beyond negotiation and fair play. There are consequences to every action. The scorpion’s sting meant death to both the scorpion and the frog. The consequences of this veto message are a less prosperous state and an increase in the chasm that separates the state’s wealthy from everyone else.

For a complete list of the governor’s line item vetoes, see the chart


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Filed under As a Matter of Fact, blog, Democrats, Gov. Chris Christie, line item veto, Millionaire'sTax, New Jersey Policy Perspective, NJ State Budget, veto override, women's health issues, working poor

>AS A Matter Of Fact…Democrats make a statement with budget plan of their own

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June 27th, 2011 | Published in NJPP Blog: As a Matter of Fact …

Democrats have done an unexpected thing. With just days to go before a budget must be enacted, they have introduced their own budget – a “this is what we stand for” budget – with a companion millionaires’ tax to restore at least some of the Christie administration’s proposed program cuts.

That they did this shouldn’t be a surprise.

It’s common practice for the party that controls the Legislature to draft and sponsor the state budget. The Democrats control both houses just as they did last year.

But last year the majority party ceded budget power to the Republican minority, who produced a bill that closely resembled Governor Christie’s March 2010 proposal. Many expected the same to happen this year, so it’s somewhat surprising Democratic leaders have proposed a spending plan of their own.

Here’s what is being proposed [The actual list of changes has not been posted publicly although the press has been briefed and Senate President Sweeney’s office confirmed details]:

MORE REVENUE

$913 million from higher than expected revenue estimates: In March 2011, Governor Christie’s proposed budget planned to spend $29.4 billion in FY 2012. In May, when revenue projections were updated, the Office of Legislative Services (OLS) estimated that collections for the current year and next would be $913 million more than the Governor’s original March estimate. The estimate assumed the current tax structure would remain the same.

$550 million from the reintroduction of the millionaires’ tax: Last year, the legislature passed a millionaires’ tax bill that increased taxes on taxpayers with incomes over $1 million. Governor Christie vetoed the bill. The legislature could not override the veto. In this year’s bill, the additional tax revenue would be tied to additional aid for wealthier suburban schools. Part of the logic is that Republican legislators might be willing to vote for a bill to raise income tax rates on their wealthier constituents if that additional revenue stays in the wealthier school districts.

$300 million in funding shifts from programs that have unused balances: Not all programs spend their entire appropriation every year. Unspent funds either lapse and become unavailable to the program or they rollover and become part of the same program’s spending in the following year. This year the legislature has determined that $300 million is available to be cut from programs that have been over-funded in the past and added to programs that need additional support.

AMONG THE DEMOCRATS’ PRIORITIES

School Aid: The democrats’ bill would add at least $1.1 billion to school spending. Senator Sweeney said this includes the Supreme Court-mandated $500 million for the state’s poorest, urban districts and $600 million for defunded suburban school districts. Something to keep in mind is that the original Millionaires tax enacted in 2004 was tied to property tax relief for senior citizens. That connection made the bill palatable to some Republican legislators who represented senior citizens who would benefit from the property tax relief but would not be subject to the higher tax rates.

Property Tax Relief: It is said the bill would double Homestead Property Tax Rebates – not triple them as Christie said he would do.

Money not spent on the Homestead Property Tax Rebates would be used to unfreeze the Senior Freeze program, allowing new seniors to participate and raising the amount rebated. This program freezes property taxes for people over 65 who earn less than $80,000. In the current fiscal year, only seniors already in the program were eligible for the rebate and the amount was limited to the amount received in the prior year.

It is said an additional $50 million would be made available to communities with understaffed fire and police departments – aiding Newark, Camden and other communities with high crime rates.

Health Care: It is said the bill would restore $7.5 million in ideological cuts to women’s health clinics and $300 million for NJ FamilyCare and Medicaid to allow working parents to continue to obtain affordable health care coverage.

WILL THIS WORK?

By law, New Jersey must pass a budget by the end of the day on Thursday, June 30th. Passing a budget on time is a deadline the state has always taken seriously.

It is impossible to know now how the negotiations are going – if the Democrats will be successful in their attempt to share the sacrifice among all income groups and help the poor and middle class in this state. The governor vetoed a millionaires’ tax last year and has said he will veto it again. It seems unlikely Republicans would join Democrats to over-ride the governor’s veto, especially in an election year, although redistricting has left some Republicans in more Democratic districts.

In battles of the budget, the New Jersey governor holds most of the cards. He alone has the power to determine revenues and set the limit on funds available for programs. If Governor Christie doesn’t agree the state will collect an additional $800 million next year or if he vetoes the Millionaires’ tax and the legislature can’t over ride the veto, that’s money the legislature can’t spend. In addition, New Jersey’s governor has line-item veto power. Any program he doesn’t want funded can be reduced or eliminated. If this happens, the legislature’s only recourse is to override that veto if two-thirds of the legislators support the override.

The only successful override of a governor’s veto was in 1992. Governor Florio vetoed the entire budget passed by the then Republican-controlled legislature. The Republican budget had cut $1.1 billion from Governor Florio’s proposed $15.7 billion budget. At the time, the Republicans had a 27-to-13 majority in the Senate and a 58-to-22 majority in the Assembly. The override passed both houses with no votes to spare. (It was opposed by all Democrats and, in the Assembly, two Republicans.

Democrats now have a 24-to-16 majority in the Senate and a 47-to-33 majority in the Assembly, making veto overrides more difficult. So far none have been successful. Perhaps it will be this budget – this statement of what New Jersey ought to stand for – that will be the first success.

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Filed under As a Matter of Fact, Budget Battle, Democratic Budget, Democratic priorities, Gov. Chris Christie, Health Care, higher revenue, Millionaire'sTax, New Jersey Policy Perspective, property tax relief

>As A Matter Of Fact…New Jersey revenue projections

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May 17th, 2011 | Published in NJPP Blog: As a Matter of Fact …

New Jersey Policy Perspective president Deborah Howlett made the following statement about revenue projections presented today to the Assembly Budget Committee by the Office of Legislative Services:

While it’s great to hear that New Jersey tax revenues seem to have bottomed out and are beginning to climb, the state remains stuck in a very deep hole.

The Office of Legislative Services projects that revenues will approach $29.9 billion next year, an increase of $1.17billion over its current year estimates. However, even with that growth, the state’s revenue collections would still be $3.4 billion less than was collected in FY2008, the year prior to the recession. Almost all of the increase is driven by higher income tax collections fueled by the rebound on Wall Street. Revenues from sales, corporate business and other taxes are still below estimates.

The state must choose to invest these revenues wisely, using the money to restore the devastating cuts made to services and to pay into the state pension system. The money should not be used, as the governor suggested was his goal during his budget address in February, to fuel $2.5 billion in corporate tax breaks over the next five years. He’s already used $1 billion in future tax revenues to subsidize corporations and business since taking office. Those efforts have contributed to the state’s lackluster corporate tax revenue collections and have failed to create quality jobs. It’s time to abandon old, tired trickle down economic theory and embrace the reality that creating a strong, vibrant economy and attracting good, solid middle class jobs requires great schools, safe streets and the high quality of living New Jersey attained before the recession.

While the increase in revenue is welcome news, New Jersey still has far to go before it is made whole again.

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Filed under corporate tax breaks, Gov. Chris Christie, Millionaire'sTax, New Jersey, New Jersey Policy Perspective, State budget, tax revenues, tax subsidies

>Contrasting Styles Between Cuomo & Christie; Different Approach, Same Outcome No Animosity

>NJ.com yesterday had an interesting editorial that I think a lot of people should be reading.

In the face of an $11 billion dollar budget defect, NY Gov. Andrew Cuomo balanced NY’s budget by cutting spending and entitlement without raising taxes just as our governor did last year (although that is somewhat debatable). Cuomo achieved this by reaching out to legislator and including them in the process. Gov. Christie on the other hand, has created divisiveness between the governor’s office and those in the legislature with his take it or leave it approach and sledgehammer style.

Interestingly Cuomo was able to balance his State’s budget without demonizing any one group (public employees) or had to hold nonstop “Town Hall” meetings to convince people that there is a problem and his way of solving it, is the only way that it can be done.

Resident of NJ should take notice and see how a different, less caustic and abrasive style can achieve similar yet far different results.

Gov. Andrew Cuomo just won agreement on a budget for New York state that cuts overall spending and contains no new taxes. He even blocked an attempt by fellow Democrats to extend a surtax on millionaires.

If this sounds familiar, it’s because New Jersey did all that last year. Perhaps Cuomo looked across the Hudson and liked what he saw.

Now maybe Gov. Chris Christie can return the compliment. Because Cuomo has something to teach him as well.

Note the lack of personal attacks in Albany. Cuomo was tough, but he wasn’t abusive. He didn’t call his Assembly speaker a liar, for example, or clear his schedule for a nonstop tour on the unlimited greed of teachers and cops.

And he negotiated. Especially relevant to New Jersey was Cuomo’s approach to Medicaid.

Like most states, New York and New Jersey are facing daunting increases in health care costs. Cuomo’s approach was collaborative.

He invited key stakeholders, including hospitals and unions, to sit together and hammer out an agreement on cuts. If they couldn’t come up with an answer, he said, then he would do it for them.

After two months, Cuomo’s committee pulled it off, agreeing to 79 cost-cutting measures, from lowering reimbursements to shifting patients to managed care plans.

Christie wants to cut $540 million in Medicaid spending next year, a huge sum that both sides expect to be a main point of contention. But he’s drawn up his plan in secret, and even now is keeping the Legislature out of the loop. People such as Sen. Joseph Vitale (D-Middlesex), a key architect of the current system, are still looking for basic answers.

“They are crafting their own proposal in a vacuum,” Vitale says. “They would be wise to include legislators.”

Cuomo’s collaboration ensured that his plan had broad political support, and would pass. Christie’s approach risks just the opposite.

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Filed under budget deficit, entitlement spending, Gov. Andrew Cuomo, Gov. Chris Christie, health care costs, Medicaid, Millionaire'sTax, New Jersey, New York, NJ.com, tax cuts, tax increase, Town Hall

NJPP Monday Minute 5/17/10: The Millionaire’s Tax: It’s a Start

The New Jersey state budget is far from settled. In just over a week Treasurer Sidamon-Eristoff and Legislative Budget and Finance Officer David Rosen will appear again before the budget committees to reexamine the state’s financial condition and revenue collections.

A showdown is brewing between the Democrats in the Legislature and Governor Christie. Last week, both the Senate and Assembly passed bills out of committee to raise income taxes on taxpayers with incomes over $1 million. Votes were along partisan lines and a full vote of the legislature is expected shortly. The bills are expected to pass both houses because Democrats are the majority party in both chambers (Senate: 23 Democrats out of 40; Assembly: 47 Democrats out of 80). Gov. Christie has reiterated he will veto all tax increases. A two-thirds majority is needed to override a veto – that might be problematic.

Identical bills (S-10 and A-10) have been introduced to raise income tax rates to 10.75 percent from 8.97 percent on taxpayers with incomes exceeding $1 million. This new rate would be retroactive to January 1, 2010 and is expected to raise about $637 million in FY 2011. Approximately 16,000 taxpayers would be affected.

These tax bills have companion spending bills (S-20 and A-20) that reinstate homestead rebates to certain senior and disabled homeowners and tenants ($563.2 million) and restore cuts the Governor recommended to the prescription assistance programs Pharmaceutical Assistance to the Aged and Disabled or PAAD ($55.5 million) and Senior Gold ($55.5 million). These companion spending bills would be inactive until the tax bill is passed.

The provisions of the companion spending bills are as follows:

Homestead Rebates for Senior and Disabled Citizens
The Governor’s proposed budget eliminates homestead rebates for 2010, affecting over 500,000 homeowners and 100,000 tenants. These rebates would be replaced with a tax credit that would be deducted directly from quarterly property tax bills starting in May 2011.

S-20/A-20 would pay property tax rebates to senior and disabled homeowners whose incomes are under $150,000 and to senior and disabled tenants whose incomes are under $100,000. Depending on income, average homeowner rebates would range from $750 to about $1,300 and average tenant rebates would range from $150 to $700.

Pharmaceutical Assistance to the Aged and Disabled (PAAD) and Senior Gold
The Governor’s proposed budget increases the PAAD co-payment for brand name drugs to $15 per prescription from $7 and beginning January 1, 2011 requires recipients of both PAAD and Senior Gold to pay an annual $310 deductible before being eligible for low-cost medications. The $310 deductible affects approximately 100,000 senior and disabled PAAD recipients with incomes below $24,432 (single) and $29,956 (married) and another 23,000 Senior Gold participants with incomes between $24,432 and $34,432 (single) and $29,956 and $39,956 (married). The deductible for married couples is $620.

S-20/A-20 would eliminate the co-pay increase for PAAD recipients and the new $310 deductible for both PAAD and Senior Gold recipients.

This could be great news for New Jersey’s senior and disabled residents, but not so much for everyone else:

  • Libraries will close or have shorter hours with limited internet access because the state library budget has been eliminated.
  • Children will pay more for breakfast and lunch or go without.
  • Some after school programs that keep kids safe are eliminated.
  • Tuition Aid Grants to college students are reduced at the same time the state cut more operating funds than ever to the state’s public colleges.
  • Some parents of children enrolled in the state’s FamilyCare program will no longer be eligible for this program themselves.
  • Women who can’t afford health insurance will not get prenatal and ob-gyn care.
  • Working families receiving the state Earned Income Tax Credit will be hit with a tax hike when the credit amount is cut from 25 percent to 20 percent.
  • NJ Transit fare increases up to 45 percent will further strain the budgets of commuters and the state’s mass transit system.

All of the above represent increased costs in one form or another. Cuts to schools, municipalities and libraries will increase class sizes, raise property taxes and eliminate free services like library internet use and inter-library loans. Increased costs to college students may make them defer college or take longer to complete degrees. Cuts in FamilyCare and family planning services will mean more people in emergency rooms and more expensive health care. The highest ever transit increases will put more people in cars, causing greater deterioration of roads and bridges and an increase in air pollution.These cuts will most severely hurt middle and low-income people in the state – those with the fewest choices.

The new revenue and spending bills are a good start but more needs to be done. New Jersey’s budget crisis must be resolved with a balanced approach that includes other taxes and shared sacrifice by all. For other budget options, check out the Better Choices Coalition.

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Filed under disabled residents, homestead rebates, Millionaire'sTax, Monday Minute, New Jersey Policy Perspective, Seniors