Corzine announced his budget proposal yesterday which has many NJ residents very upset and speaking out against the proposed changes. From the article in the Courier Post: Corzine’s budget seeks tax hikes, cut in rebates
Gov. Jon S. Corzine is proposing a $29.8 billion state budget for the upcoming fiscal year that includes tax hikes of more than $1 billion, including the suspension of most homeowners’ ability to deduct property taxes from their income taxes.
Corzine said the deep recession requires difficult choices, including ending property tax rebates for households with incomes over $75,000 and more than a half-dozen increases in taxes. He said the budget’s $7 billion structural deficit is addressed mostly through $4 billion in spending cuts and $2.2 billion in federal stimulus aid.
“Make no mistake: Because of where the world is right now, we must move in directions we might not otherwise choose,” Corzine said.
The tax changes include raising the tax rate on incomes over $500,000, taxing lottery winnings over $10,000, extending a 4 percent surcharge on corporate taxes, increasing cigarette taxes 12.5 cents a pack and boosting taxes on liquor and wine by 25 percent.
Most surprising was Corzine’s proposal to suspend, except for seniors, taxpayers’ ability next year to deduct their property taxes from their income taxes. The one-year move would cost taxpayers an estimated $400 million, the administration says.
Businesses will face an increase in payroll taxes:
Payroll taxes would be increased on businesses, despite deposits by the state and federal governments into the depleted unemployment fund. New Jersey will put in $150 million, not the $270 million announced last month. Corzine said it would take a deposit of $500 million or more to avoid a payroll tax increase but that the money being put in will help limit the increase.
State workers will have to contend with one of two scenarios:
Corzine said he wants to reduce personnel costs by $400 million by freezing state workers’ wages and furloughs throughout fiscal 2010. The alternative, he said, would be to lay off as many as 7,000 workers. College employees’ salaries would also be frozen.
A number of other tax hikes on various goods were also mentioned. In regards to the homeowner’s rebate cuts NorthJersey.com’s article posted this analysis:
Although many budget details had leaked in advance, the lost tax write-off caught many off guard. Corzine would remove the property tax deduction on income taxes for all but senior citizens, and eliminate property tax rebates for non-senior households making more than $75,000 a year. Non-senior households earning $50,000 to $75,000 would see their rebate check from last year slashed by a third. Last year’s program offered staggered rebates for households making up to $150,000.
That could translate into a double whammy for non-senior homeowners earning $75,000 to $150,000. They lose their rebate and hundreds of dollars from the deduction.
A homeowner earning $95,000, for example, would not only lose a $1,000-plus rebate. Scrapping the property tax deduction would take away another $350 or so, according to state figures.
“The loss of the deduction would make homeownership even harder for New Jersey residents who are struggling to make ends meet during this recession,” said Senate Minority Leader Tom Kean Jr., R-Union.
The revenue raised by eliminating the property tax deduction would help pay for the preserved rebates, Corzine said, adding that he wants to restore rebates to higher income families “as soon as the recovery of state revenues allows.”
If it passes would the unintended consequences be actually forcing stuggling homeowners into selling their homes (increasing inventory even more) or foreclosure which would then result in even less revenue generated for the state? These changes would also impact future home buyers ability to afford to purchase a home and as a result home sellers would be forced to reduce home prices further to make up for the additional tax expense for the state.
What are your thoughts on Corzine’s budget proposal?
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9 Comments
I think removing the tax benefit of interest reduction is a mistake and would deter me from buying a house. I would consider selling my house and renting given the property taxes I currently pay and the interest expense I incur on a yearly basis. The state needs to reconsider the consequences of their actions.
This budget is surely going to cause hardships for the people of NJ at a time when the economy needs people to spend in order to recover. I am furious that we will not get any property tax rebate this fall. Nor will we be able to deduct property taxes on our state income taxes next year. The citizens of this state pay the highest property taxes in the nation, and now the Gov wants to do away with the very programs that were to help us in that respect. Remember when the sales tax was raised from 6% to 7% and government officials swore that additional revenue would only go to property tax relief? Well.. where is the money??? And, as the wife of a state employee, I am outraged that he will be furloughed. He is an attorney who works very hard on behalf of victims of crime. He has had a wage freeze already for two years and is looking at another two year freeze (he hasn’t even received cost of living increases), works so much at home on nights and weekends and gets no pay.. and now he will be furloughed?? Because the state can’t balance the budget?? It is time for the citizens of New Jersey to finally stand up and say “enough.” Either that, or we all need to move out of this state. That’s what I think of the budget. It is a crock and an assault on the middle class.
Sounds like the “cost of poker” is going up in New Jersey, big time.
So far, Colorado has only proposed minor tax hikes in the form of higher user fees including fees on big energy. Nobody cares much about that because “they can afford it”. But, consider that such fees get passed along in the form of higher energy prices eventually.
The old saying; You can pay us now or pay us later. Either way, the citizens end up paying the bills for government.
@Matt: I agree. The consequences could very well be the exact opposite and create an even bigger tax deficit.
@Lisa: A good question, where exactly is all the money going?
@Larry: Energy prices have gone up here the last couple of years already. Bottomline, government needs to cut spending.
Corzine is trying to cripple the middle class. Anyone earning $75,000 in NJ is barely scraping by. To eliminate that much welcomed rebate is insane. I suggest he a) forgo his salary, b) seriously trim fat in all state departments, c) offer incentives to all those willing to move away from NJ. I will be the first in line.
I’d like to see what else is NOT being cut form the budget. Are there any programs that need further scrutiny? I may agree with what was proposed on incomes over $500,000, and “sin” taxes (lottery, tobacco, liqueur), but I’m sure there are others ways. What about investments for long term growth? I’d like to see a 5 year plan including investments and spend instead of a 1 year plan that involves mostly Tax areas.
I remain amazed at governments inability to realize that raising taxes is not the only way to increase income. How about just not spending as much? What a novel concept.
It amazes me that people are surprised by what Corzine does. This is his MO. And as a state employee, to all the people who find it so easy to talk about cutting our jobs, I hope you have room in your home for my family. Starting in May, I will lose money every month, and now there is property tax deduction for me. You give him a little leeway and he takes a mile. Next year, the taxes will be raised again, I will have three days off every month, and there still won’t be a property tax deduction. Maybe the state tax will go up to 8%.
Corzine’s proposed budget calls for removing the property tax deduction on income taxes for non-senior households earning over $75,000. As a senior making over $100,000, what would I lose under the budget?