I am of two minds on the state Senate’s failure to pass the 20 percent tax credit.
A graduated tax credit that could save the average taxpayer about $1,200 over the course of the year seemed to be better than nothing, but approving the credit might just doom further efforts to achieve real reform.
The reality is that the tax-credit plan was a sham, nothing more than a way to salvage the complete failure of the state’s tax reform efforts, to make it appear as if the state Legislature accomplished something even as all of the evidence proved the contrary.
The plan — a 20 percent property tax credit for those who earn up to $100,000, 15 percent for those who earn between $100,000 and $150,000 and 10 percent for those who earn between $150,000 and $250,000 — would replace the current property tax rebate propbram for most residents.
The plan also includes a questionable cap on property tax levies that, even with the massive loopholes attached to the bill, will do little to control taxes while tying the hands of local goverment and school boards — the entities we rely on most on a day-to-day basis.
Under the plan, the state would give money to the municipality, which would then apply the credits to individual tax bills reducing the required payments. Tenants and seniors would continue to receive rebate checks.
The plan sounds good on the surface, but has several serious shortcomings: 1) It may not be sustainable beyond 2008; 2) it does not address the way we raise revenue to pay for government; 3) or offer require any government streamlining.
This is the point that state Sens. John Adler and Nia Gill — two of the four Democrats objecting to the bill — were trying to make:
Sens. John Adler, D-Camden, and Nia Gill, D-Essex, questioned how the state would pay for the $2 billion credit program in the long run. A financial quirk gives the state government extra money to use for this year only. Adler and Gill both said the credit program, which will take the bite out of tax bills but not address root causes of high property taxes, falls short of true reform.
“If we were selling this tax package as a product, we would be in violation of the Consumer Fraud Act,” Gill said. She later added, “In plain language: We do not have the money to pay for this.”
Adler said the caps had been “gutted” and called for lawmakers to go back to the property tax reform drawing board, rather than pass watered-down bills and declare them “good enough.”
“We should step back, take a breath, ask for a do-over,” Adler said.
Taking a step back makes sense, as does the suggestion that Assemblyman Bill Baroni and state Sen. Peter Inverso — Republicans who represent Cranbury, Jamesburg, South Brunswick and Monroe in the Legislature — made to us last week:
Mr. Baroni said the state had its chance to reform taxes, and failed. He said that he would like to see a constitutional convention where citizens are elected as delegates and propose changes in the way the state taxes its citizens. The changes would then go to voters in a statewide referendum.
“The Legislature has had its chance,” Mr. Baroni said. “Now let’s let the people of ‘New Jersey do it.”
Sen. Inverso agreed. He said the Legislature has failed to make significant property tax reform, and he will continue to push for a constitutional convention.
“You have seen what happened to these proposals that have come out of the Special Session Committees,” Sen. Inverso said. “They’ve been diluted and to quote my dear friend (state Sen.) Barbara Buono, they’ve been emasculated. It shows that this process is not one where taxpayers, who don’t have a special interest presence each and everyday, are the ones that will benefit from it.”
I’ve written about this before, but it bears repeating: The four-month review of state and local government, their budgets and tax structures was a bold undertaking, but given the swirl of interests in Trenton and their fear of change, it was doomed to failure.
In the nearly three months since the release of the joint committees’ findings and recommendations, we have learned that the state Legislature cannot be trusted to overhaul the system.
It is time to let taxpayers have a whack at it.
South Brunswick Post, The Cranbury Press
The Blog of South Brunswick
Hank Kalet 