Already at odds with Senate President Steve Sweeney (D-West Deptford) and Gov. Chris Christie over a proposed state takeover of Atlantic City’s finances, Assembly Speaker Vincent Prieto (D-Secaucus) bucked the two leaders again on Monday by coming out against a full repeal of New Jersey’s estate tax.
A bipartisan proposal to gradually phase-out the estate tax over a five-year period has already seen some movement in the Senate. The measure, sponsored by state Sens. Paul Sarlo (D-Wood-Ridge) and Steven Oroho (R-Sparta) and supported by Christie, calls for the exclusion rate on the estate tax, which currently applies to inheritances valued at $675,000 or more, to be upped to $1 million beginning Jan. 1, 2017. Following that date, the rate would then be increased annually until it is eliminated altogether.
Prieto used tax day on Monday to join a coalition of organizations which oppose the bill and speak out on the need to prioritize the state’s Earned Income Tax Credit program over a full estate tax repeal.
“If you want to talk about real tax fairness, then you must talk about actions such as increasing tax credits for working families, not providing tax breaks to the wealthy,” Prieto said. “That’s why I proposed and the Assembly approved increasing New Jersey’s Earned Income Tax Credit to 40 percent of federal benefit amount. We know this tax credit benefits its recipients substantially, and we clearly need to do more in the face of rising poverty in this state. Research clearly documents the EITC’s beneficial effects on poverty, consumption, health and even the academic outcomes of children. This is among the best actions we can take to rebuild our middle-class and provide tax fairness to working families.”
Prieto later told reporters that he would be more inclined to support raising the thresholds on estate tax exemptions rather than doing away with it altogether. He also suggested that he would like to see the bill be tied to some dedicated increase in transportation funding.
“Thanks to Trenton’s misplaced faith in trickle-down economics, working families in post-recession New Jersey are paying more in property taxes, tolls, tuition and fees, while getting less for what they pay,” said New Jersey Working Families executive director Analilia Mejia. “Now, some voices are saying we need to double down on this failed trickle-down strategy by eliminating taxes for wealthy heirs and heiresses. But any real plan for ‘tax fairness’ in New Jersey requires rolling back tax breaks for the fortunate few and following Speaker Prieto’s lead by expanding the state’s Earned Income Tax Credit, not throwing good money after bad with a $500 million giveaway to the wealthy.”
“New Jersey’s state and local tax structure is out of balance, and eliminating the estate tax on inherited wealth would make this problem worse,” added New Jersey Policy Perspective deputy director Jon Whiten. “As it stands now, low-income and working-class New Jerseyans pay a larger share of their income to state and local taxes each year than their wealthy neighbors. Our policymakers should be working to right that wrong, rather than pushing for tax policies that favor heirs and heiresses.”
Prieto’s latest comments on a proposed estate tax repeal, which is widely supported by the business community, come as the Speaker continues a standstill against Sweeney and Christie over what to do in Atlantic City.
Sweeney, Sarlo and Assembly Majority Leader Lou Greenwald (D-Voorhees) have all been proponents of a state takeover plan supported by Christie that has been stalled in the Assembly by Prieto and criticized by Atlantic City Mayor Don Guardian.
Despite the measure passing in the Senate, Prieto has declined to post the bill in the Assembly, saying it goes too far and threatens existing collective bargaining contracts. Christie has responded by accusing Prieto of playing politics with labor unions and has threatened to campaign against a proposal for an expansion of casino gaming to northern New Jersey if the bill is not posted for a vote.