The middle class taxpayers of New Jersey are under assault. They are caught in the cross hairs of an attack from their liberal tax and spend Governor and surprisingly from the right, in an attack from their supposed friend in ultra conservative candidate Steve Lonegan. While Governor Corzine's plan to increase taxes, to end the property tax rebates and to eliminate the deduction for our outrageous property taxes for the middle class were to be expected, I had some hope for relief from Mr. Lonegan. As I have some insight into State Budgets and New Jersey's tax policies, I thought I would check him out.
I have to wonder if he simply does not understand the New Jersey income tax system, or worse if he actually intends to increase the income taxes for two thirds of New Jersey's residents. While his plan sounds simple and perhaps appealing, the idea that we could replace our current graduated tax rate with a single or flat rate system, a simple review of the numbers shows this plan to be a flat out loser, destroying the middle class and seniors while rewarding only the most affluent.
Mr. Lonegan claimed in his press release that his plan would benefit an "overwhelming majority of homeowners and taxpayers", the facts and the numbers are not on his side. I went to the Department of Treasury website and looked at the data for the most current tax year and confirmed my belief that his plan would devastate the middle class and the senior citizens of this State.
The truth is that every married couple filing a joint return, with an income under $100,000. Some 860 thousand New Jersey families would see their income taxes dramatically increase under his proposed flat tax. In fact, families with a taxable income of $70,000 would see their income tax increase over 56%. So much for helping the middle class and New Jersey's working families.
The numbers are very similar for taxpayers who file individual returns. Taxpayers with an income under $50,000 would pay a staggering increase, as much as doubling their tax burden. Over 1.4million taxpayers earning less than $50,000 file their returns using the single status and would be penalized by this new "flat tax" scheme.
Senior citizens are particularly vulnerable to the damaging impacts of this flat tax. There were over 400,000 tax returns filed for 2006 where at least one filer was over 65 years of age with a reported income of less than $50,000. This represents 76% of the total tax returns for that year where at least one filer was over 65. The Flat Tax scheme is a staggering and indefensible tax increase for our seniors without any value or benefit.
The Lonegan "Flat Tax" scheme is nothing short of an assault on the middle class and senior citizen population of New Jersey. By my calculation, over two million taxpayers would see an increase while a million would see a reduction. With two thirds of the state losing, this plan is a "Flat Out Loser". On top of that, Steve suggests that this plan will not significantly reduce the total tax receipts; he appears to simply want to tax the middle class and seniors while giving incredible breaks to the rich.
I believe that we all need a break from the staggering taxes in New Jersey and guess I will have to keep looking for help.
Peter Lawrance served as Acting State Treasurer in 2001-02. He spent 22 years in the Office of Legislative Services Budget Office, and seven years as Deputy State Treasurer and Deputy Director of the Office of Management and Budget