Tax Equity Group Proposes Alternatives To Budget Cuts

Newsday — Wednesday, March 29, 2006

Associated Press Writer

TRENTON, N.J. — The state could raise nearly $800 million by making more upper-income residents pay additional taxes and by suspending incentives that businesses get to relocate or remain in New Jersey, a coalition representing unions and social service groups said Wednesday.

Raising the income tax bracket for more than 100,000 New Jerseyans earning $200,000 to $500,000 would generate $462 million, according to the Fairness Alliance. Suspending tax breaks to certain businesses would raise $310 million, the group said during a Statehouse news conference.

The proposals, some of which drew criticism from a statewide business association, came the week after Gov. Jon S. Corzine proposed a $30.9 billion budget that would cut spending by $2 billion and add $1.8 billion in taxes in an effort to close a projected multibillion dollar gap. Critics have decried the plan as harmful to programs such as higher education, and unfair to poor people because the sales tax would increase by one cent to 7 cents.

The Fairness Alliance gave Corzine's budget proposal above-average grades in five areas, including fiscal responsibility, preservation of existing services, and raising needed money.

Ev Liebman of New Jersey Citizen Action, a citizen watchdog agency, said the governor was making "a good start toward putting New Jersey on a firm financial footing."

Anthony Coley, a spokesman for Corzine, said incentives for business will help the economy.

"To achieve strong growth, we need a favorable investment climate for business and private enterprise," said Coley, who added that increasing the sales tax is a better choice than expanding taxes for higher-wage earners.

"After proposing $2 billion in budget cuts, the governor concluded that the sales tax, not the income tax, should be the primary tool for generating new revenue. This is a tough budget with tough choices that will put New Jersey on a path to fiscal stability and responsibility," Coley said.

The alliance did not specify how the extra money should be spent. However, Jon Shure, president of New Jersey Policy Perspective, a liberal think tank and alliance member, said restoring a portion of the $169 million stripped from public colleges and universities in the budget plan should be a priority.

Shure said the group was taking Corzine up on his challenge to suggest alternatives to cuts contained in the spending plan, which needs legislative approval.

Arthur Maurice, first vice president for the New Jersey Business and Industry Association, took issue with the alliance's contention that businesses weren't shouldering their fair share of taxes.

"Since 2002, employers in this state have faced year after year of tax increases to the tune of an additional $7 billion in tax increases," Maurice said. "If we're going to get this budget back on track, if we're going to have funding for the kind of social programs the Fairness Alliance thinks we should have, the way to do that is through economic growth."

The Fairness Alliance proposal would raise the income tax bracket from 6.37 percent to 8.97 percent for residents earning $200,000 to $500,000 and would suspend tax breaks for a year to businesses aided by various business incentive programs.

Maurice said the programs actually generate money for the state because businesses receive their incentive grants only after the jobs they've created have existed for a year and the employers have paid taxes on the positions.

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