BUSINESS & ECONOMY

Senate Budget Committee Approves Estate Tax Phase Out Bill

By David Cruz
Correspondent

Tax fairness. It’s the catch phrase that has accompanied any discussion of increasing the gas tax as part of funding for the Transportation Trust Fund. But what does it mean, tax fairness? That depends on who you talk to but the working definition right now appears to be, at least, a phasing out of the estate tax over five years. That’s what Senate bill 1728 calls for. It was the most discussed of several bills before the Senate Budget Committee today.

“It’s a bill that many consider tax fairness,” said Budget Committee Chairman Paul Sarlo. “It’s a bill some will argue helps to keep the middle class and senior citizens here. I know there’s many out there, including editorial writers, including certain advocacy groups, who will say that this is only about protecting those with estates. Well, that’s not necessarily true.”

The bill, which Republicans — including the governor — have insisted on as part of any discussion about a gas tax increase, would move the taxable threshold from the current of $675,000 to $1 million, starting next year and ultimately to $5 million by 2020. After that, the tax would go away entirely.

“The net adjusted gross income that we’ve lost over the last 10 years is $19 billion, and when you look at it year by year, it’s accelerating,” said Republican co-sponsor Steve Oroho.

As you might expect, the business community, which has been on this case for years, says it supports this move as a positive first step towards, you guessed it, tax fairness.

“That’s going to make us competitive with other states around the country who are the states where New Jersey residents are flocking for more favorable tax benefits,” added New Jersey Business and Industry Association President and CEO Michele Siekerka.

But there are lawmakers and advocates for any number of issues from the environment to working families, who say losing the close to $400 million the tax will produce in 2017, will be a blow to the state’s budget that will not be easy to overcome. And scoff at the idea of tying an increase in the gas tax to a phase out of the estate tax.

“It should not be tied to eliminating a tax that the most wealthy have to pay, so that makes no sense whatsoever,” said Sen. Ray Lesniak. “If my colleagues propose that I’ll certainly oppose it. That’s the wrong way to go.”

Analilia Mejia, executive director of New Jersey Working Families, said the math doesn’t add up.

“We cannot afford right now to give away another tax break to the very wealthy, and in exchange asking every single New Jerseyan to make due with less,” she testified. “This tax, and we have seen the studies and statistics, only impacts 4 percent of the wealthiest estates in our state.”

Opponents were heartened by four Democrats who abstained on the bill, although, those were not enough to stop it from safely making its way out of committee, with unanimous support, from Republicans.