From the Home News Tribune:
New Jersey’s income tax should be relied on more as the state looks to cut the nation’s highest property taxes, a liberal-leaning policy group said yesterday as it sought to help shape the ongoing property tax reform debate.
New Jersey Policy Perspective recommended reworking the state income tax to reap another $1 billion per year from the levy.
Shure said the proposals — which would involve increasing taxes on those earning from $250,000 to $500,000 per year and taxing all 401(k) retirement account contributions — would help cut the state’s heavy reliance on property taxes to pay for local government.
Legislators considered increasing income to help solve a $4.5 billion budget deficit last summer, and the idea has popped up during property tax reform talks, but Gov. Jon S. Corzine has repeatedly expressed concern about increasing income taxes.
“It’s the fairest tax we have in New Jersey,” said NJPP President Jon Shure.
The income tax is expected to raise about $11.6 billion this fiscal year, but 42 percent of the money is paid by the wealthiest 1 percent of taxpayers. Corzine and others fear that if the income tax was raised those people may leave the state.
Corzine also fears that relying too much on the income tax leaves the state vulnerable to economic downturns that cut into taxpayer earnings.
But Shure said the fact that wealthy taxpayers pay most income taxes proves the tax is working because the tax is supposed to be based on a person’s ability to pay.