Bipartisan Proposal: Cut Estate Tax, Raise Gas Tax for Transportation Trust Fund

Cheap Jersey gas may follow the Edsel down the highway into history. A 23-cent a gallon gas tax is part of a draft deal that would finally refill the fund that pays for repairing and replacing crumbling roads and bridges. The bipartisan proposal combines tax hikes with some cuts to pump $20 billion into the Transportation Trust Fund over 10 years. It’s a plan even the gasoline retailers are backing. NJTV News Anchor Mary Alice Williams and Chief Political Correspondent Michael Aron spoke about the latest developments with Assembly Minority Leader Jon Bramnick and from Wood-Ridge, state Senate Budget Committee Chair Paul Sarlo.

Williams: Senator, is this going to fly?

Sarlo: Well, this is something that’s been in the works for a long time. We need to make this significant investment in our infrastructure and I’m glad that we will be able to roll out a bipartisan plan that includes a significant investment in our infrastructure and our roads, but at the same time provide tax fairness to our citizens across the state of New Jersey, including our middle class and even our working poor. So, it’s something that’s necessary. We’ve been elected to lead. And it’s been great working with Sen. Oroho in the Senate. We’ve been working on this for many months and we are glad that we’ve finally been able to roll something out.

Williams: OK. Let’s get to the particulars here if we could. It involves an up to 23-cent per gallon gas tax increase and then a phase out of the estate tax by the year 2020. It would increase earned income tax credit to 40 percent. It would add retirement income exemptions, it would add charity deductions for the first time ever and it would add a gas tax deduction for some people. Michael Aron?

Aron: Mary Alice, that gas tax deduction by the way is for people who spend more than 1 percent of their income on the new gas tax hike. I don’t know how many people would qualify for that and they’d have to save their receipts. I want to ask Jon Bramnick how are Republicans receiving this plan? I mean, you’ve got a Republican senator, Steve Oroho, backing this but I haven’t seen any press releases from any other Republicans.

Bramnick: Well, let’s start with the fact that now I hear my friends, both the Senate Democrats and the Assembly Democrats talking about lowering some taxes, whether it’s related to pensions, whether it’s related to the estate and inheritance tax, so now we’re getting really close because we needed that to get this ball rolling. So now we’re in the final phases here. So both proposals were unveiled today.

Aron: You say both. There was an Assembly proposal that was a little less detailed than this Senate proposal.

Bramnick: Correct. And there’s a competing proposal between Assemblyman Prieto, the speaker, and the Senate president. Now the Republicans are saying OK, now we’re talking about lowering some taxes. Now we’re ready to talk about — at least some of us — possibly raising some taxes.

Williams: Is losing the estate tax — phasing it out over time — tax fairness? That affects only people who have estates.

Bramnick: Well that’s not true because an estate now is taxed just over $650,000. That could be a home and maybe some minimal assets. So this affects people who are thinking about leaving the state. Now we’re having a real discussion here. When’s the last time anyone talked about lowering taxes in Trenton? So my hat’s off to Sen. Sarlo.

Aron: Sen. Sarlo, what do you think the prospects are that Gov. Christie will sign a 23-cent per gallon gas tax hike?

Sarlo: Well as Assemblyman Bramnick said, there is a lot of components in here that we believe the governor would be very interested in. This is something on the Senate side that we’ve worked in a very bipartisan manner. We’re aware of a few senators, both on the Republican side who are committed and willing to come on board. We’ve seen parts of the Assembly plan today. I’m glad to see the Assembly also has a plan, very similar although their details are not out fully yet. I am confident that the Assembly and the Senate will work together on this plan. This is an opportunity for the Assembly and Senate really to come together real strong on the last few weeks of this budget cycle to put something on the governor’s desk. I am confident looking at the framework that the Assembly laid out that it mirrors what Sen. Oroho and I have been working on for a few months now.

Aron: So this deal sounds like it’s cooked. That’s all I can say. You agree with that senator?

Sarlo: I don’t want to say it’s cooked. We have a lot of work to do here in the next couple weeks to sell it to our colleagues, both Republicans and Democrats not only in the Senate but in the Assembly. I was glad to see Assembly Speaker Prieto come out with a plan today very similar to what we’ve been talking about and proposing. So this is all good stuff and I am confident if the governor is not happy with the full plan, you hate to use the word override, but I am confident that the Legislature, there’s enough in this for everybody, not just for a 10-year investment for our infrastructure, to grow the economy, to create jobs, but also to provide some tax credits, tax cuts to people of all incomes across the state of New Jersey.

Williams: Assemblyman Bramnick, are you on board? Can you get all the Republicans on board?

Bramnick: I doubt that. I can tell you though, these rolled out today. Tomorrow we’re going to have a call with my caucus. All of my members, people who will say I will never vote for a sales tax, period, end of story.

Aron: Gas tax.

Bramnick: Well, it’s a gas tax, but technically it’s on buying something so I’ll call it a sales tax. Bottom line is, oh absolutely not everyone is on board. But we’re beginning to get to the point where we’re talking about lowering some taxes. I said from day one, I think the governor said from day one, we need some tax fairness, we need some tax reduction, we’re moving forward and I’m pleased as to what I see. I think we’ll be able to get there, at least with some Republicans.

Williams: Better roads and bridges help the economy at large but taxes also affect everybody. How big of an impact? We’ve heard from Sen. Sarlo. How big of an impact do you think this will have?

Bramnick: Taxes are bad. There’s no doubt about it. There’s nobody who likes higher taxes. It’s not good. The question is, is it necessary? Is there any other alternative? That’s what we’re going to explore in the caucus. And thirdly and most importantly, we’re starting to lower some taxes. That to me is a threshold question that had to be answered and now it’s been answered for me.

Aron: Sen. Sarlo, we only have about 30 seconds left. Are we going to regret getting rid of the last low tax that New Jersey enjoys? Our gas has always been cheaper than Philadelphia and New York.

Sarlo: Well Michael I will say this. Thirty percent of the fuel that’s purchased here in the state of New Jersey at the pump is purchased — between 30 and 40 percent — is purchased by out of state drivers. And if we don’t make this investment, our infrastructure continues to crumble. Towns like Wood-Ridge where I’m sitting in, we will have to raise property taxes to invest in our infrastructure. Not just our local and county roads, as well as our highways. So this will prevent property taxes in the future. And even at the rate that we’re proposing it, we will still be comparable to so many other states across the nation. So just remember, 30 to 40 percent of the fuel that’s purchased at the pumps in the state of New Jersey are from out of state drivers.

Williams: OK, thanks for being with us Sen. Sarlo, Assemblyman Bramnick.