Federal tax reform cut taxes on corporations but capped the state and local taxes individuals can deduct. In his budget address next Tuesday, Gov. Phil Murphy’s expected to propose paying for state programs by imposing a tax on millionaires. But the senate leader’s proposing a tax on companies to pay for schools. NJTV News Correspondent Briana Vannozzi spoke with State Senate President Steve Sweeney.
Vannozzi: Sen. Sweeney, is this an alternative to the millionaire’s tax?
Sweeney: No, it’s the solution to start helping funding our schools. This is not competition. What we were looking at is not taxing individuals, but we’re looking at corporations, that by doing absolutely nothing, not selling one more product, not doing a thing, wind up receiving $2.9 billion from the federal government. So we’re talking specifically about C corporations, which are large, they’re their utilities, they’re insurance companies, they’re Wal-Marts of the world. So what we’re saying is, since they were the benefactors of this tax cut, and by the way the tax cut came from the taxpayers of New Jersey because the taxpayers themselves are the ones that are going to see their taxes go up. I just thought it was a very good fit for us because the corporations can actually write off this increase, where we can’t write off our taxes anymore.
Vannozzi: So it’s a 3 percent surcharge on the CBT [corporate business tax] for corporations earning over $1 million in their net income. How did you come to that 3 percent number?
Sweeney: We were just looking, at what honestly, I thought, was fair. And I thought that was very fair, because what you’re talking about is for every hundred new dollars that they’re getting from the federal government, they’ll keep $83 of it and the school districts will get $17 of the $100. So, it’s not like we’re trying to gouge or gorge anyone, we want to be fair to everyone. But most importantly, we want to be fair to the taxpayers of the state. They’re the ones that have bared the burden of this so-called tax cut which Washington has hailed. I told people earlier, $2.9 billion for doing nothing.
Vannozzi: But that 3 percent would potentially generate something like $650, $700 million, the same as a millionaire’s tax, so some would say it’s an alternative.
Sweeney: You know, the numbers happen to be that. You have to understand that we’re taking other funding, too, in this plan, which is taking the over-funded money from districts that don’t have the children anymore. We’re taking $127 million of that, so we’re not matching it up and saying, ‘oh this matches this,’ because that’s not the case. The case is we, for two years, went around saying we were going to fund education. We listened to school districts, we listened to families, we did a whole listening tour, and at the end of the day what we recognized is we have a need to fund schools. Now, I’m looking at it to fund it on the backs of, a portion of it on the backs of corporations, multi-million dollar, if not multi-billion dollar corporations that have done nothing to earn this tax break that they’ve been given.
Vannozzi: We’ve got a week though before the budget, how much time does this give for you and the Governor’s Office to work together? Can this be negotiated into this upcoming budget?
Sweeney: The budget, the governor announces his budget on March 13 and that’s when the discussions actually start. This is a plan that I have, that I think is fair. It doesn’t mean that the governor’s plan is wrong or mine’s wrong. It’s just something I think is fair, that we take the opportunity to take the windfall, a piece of the windfall from corporations, and provide it to taxpayers to improve school funding. So the budget goes until June 30. We prefer it not go beyond that, so it goes to June 30, so this is just something that I feel is important to have this discussion on.