Wanted: Democratic Leaders with Vision (An opposing view on TTF & Estate Tax)

The Democrats and the TTF seem to be about out of gas.

The Democrats and the TTF seem to be about out of gas.

New Jersey Democrats have missed another opportunity to lead with vision. Instead, it appears they have knuckled under to the Governor yet again.  In fact, their current proposals to fund the Transportation Trust Fund with an accompanying phase out the estate tax does absolutely nothing to inspire confidence that our Democrats are ready to lead this state in 2018.

Here is what we are faced with this week:  Democratic leaders have been outplayed by the Governor yet again or they actually believe tax fairness is achieved by raising the gas tax while cutting the estate tax.  Either way we are in deep trouble if this is the best our leaders have to offer.  But it is possible that both are true – which an even darker cloud over our party’s elected officials.

We have known about the TTF funding crisis for well over a year.  In fact, last year when then Commissioner Fox testified in Legislative budget hearings, he sounded the alarm.  Democrats failed to put forth a proposal last year, kicking the can down the road, scared of tackling a tax increase close to their election.

Last September the message was clear from the Governor when he said no gas tax without ‘tax fairness’.  He followed up in June by saying he was waiting for a proposal from the Legislature.

Clearly the ball was in the Democrat’s court to define the agenda and initiate the proposals. This was a chance to lead – to set the agenda and define the narrative.

So last week, Democrats act.  They put forth not one, but two proposals to fund the TTF.  Both proposals phase out of the estate tax giving the Governor the tax fairness he demanded. By refusing to come to consensus before releasing competing proposals, and doing so weeks before the budget is due, Senate and Assembly Democratic fueled the Governor’s narrative that they are more the problem than the solution.  Hardly a show of strength.

They have played right into Christie’s hands. And even with the delay, the Democrats have not done the work to build support for an admittedly hard sell of a gas tax.  Within hours of these dueling proposals, NJ Citizen Action and NJ Working Families started mounting campaigns against both proposals.

Strategically it is hard to see how this was well played by the Democrats.

But it gets worse because Democrats are now named sponsors on legislation to phase out the estate tax during another budget cycle when we are shortchanging education funding, property tax rebates, scrambling to fund pensions, and so much more.

The estate tax unquestionably applies to the most privileged of New Jersey residents.  New Jersey Policy Perspective estimates 4% of New Jersey households are candidates for the estate tax.  It is another give away to New Jersey’s wealthiest residents and not even remotely anything that could be considered tax fairness.

The Democrats have capitulated or concurred with the Governor on this warped version of tax fairness.  Either way, we should not be cornered into accepting this as the best we can do in the little time we have left to fund the almost broke TTF.  The public did not wait until the last minute, kowtow to the Governor and propose two versions of a solution.  Now we should not be forced to pay the bill for the abdication of good leadership.

If we acquiesce, we are giving a free pass to elected Democrats on these critical issues.  We cannot allow them conflate tax breaks for the rich with tax fairness and we cannot, after 6 years of demonstrated failures, allow them to negotiate with a Governor who does not keep his word.

It is way past time that the Democrats put forth an intelligent proposal to increase the gas tax, with tax credits for those who rely on driving for work and an increase of the EITC, in order to minimize the regressive impact of the tax. Force the Governor to defend the onerous position of cutting the estate tax as a form of tax fairness.

But we have to demand that our Democratic leaders do the right thing now because apparently they are not naturally inclined to do it on their own.

 

 

 

 

Comments (9)

  1. 12mileseastofTrenton

    Well said. The problem is that people like Sarlo, Sweeney and Weinberg really believe that cutting taxes the top 5% while raising them on the bottom 95% is some sort of tax “fairness.” Besides expanding economic inequality, eliminating the estate tax will cost the state $500 million a year, at a time when there is still a massive pension whole. It makes no sense in terms of fairness, or in terms of practicality.

    Now the argument they may be making to the caucus is that, when we win the governorship and have total power in 2018, we can end the phase out. Or bring it back. But that assumes Dems will win the governorship. And the precedent of eliminating the estate will have been created. Besides, I wouldn’t trust people like Sweeney and Sarlo.

    The best bet is to not pass this bill, or to hope Christie vetoes it and his veto is sustained. Regardless, I have contacted my legislators. I urge others who feel this way to do the same.

    Reply
  2. Bill Orr

    I agree that phasing out the estate tax is wrong because it benefits the wealthier among us and takes needed income out of our stressed budget.

    However, it is not fair to state that the plan cuts taxes on the top 5% while raising them on the bottom 95%.

    Given the value of homes in NJ today plus other items left in an estate it is not just the top 5% who leave estates over $600,000.

    The plan gives senior citizens an increased exemption on their retirement income (for those earning $100,000 or less from current $20,000 for couples/$10,000 for individuals to $40,000/$20,000 in the 2017) benefitting the poor and middle class.

    It raises the Earned Income Tax Credit for the working poor (from 30% of federal credit to 35%.)

    It makes charitable contributions to New Jersey social service providers tax-deductible which benefits non-profits serving the most vulnerable.

    It establish an income tax deduction of all gas taxes paid by those for whom gas tax exceeds 1% of income, particularly beneficial to the poor and working class.

    It double county and municipal transportation aid which provides additional infrastructure funds which don’t have to come out of local taxes and reduces pressure for property tax increase which benefits middle class and working families.

    The above data is based on the Senate plan: http://politickernj.com/2016/06/senators-announce-bipartisan-agreement-on-transportation-trust-fund-and-tax-cuts/
    Here is the somewhat different and less fleshed out Assembly plan which provides even more money to municipalities for transportation infrastructure: http://www.assemblydems.com/Article.asp?ArticleID=11243

    Reply
    1. 12mileseastofTrenton

      Fromm the diary:

      New Jersey Policy Perspective estimates 4% of New Jersey households are candidates for the estate tax. It is another give away to New Jersey’s wealthiest residents and not even remotely anything that could be considered tax fairness.

      Reply
  3. WJCaruso

    I want to second Bill Orr’s comments above. But, I’ll admit that I need a better understanding of the folks who will be helped by the estate tax. For starters, I don’t believe the hype that this only benefits the wealthy. Bill’s analysis seems right in that $600k doesn’t seem like a lot of money in NJ. What if a pizza parlor owner dies and rather than leave that business to his daughter, the family needs to liquidate it to cover the estate taxes. That small business closes. The employees are now without jobs. and, that storefront is now vacant. Further, the lack of infrastructure improvements hit us a lot harder than the proposed gas tax. Flat tires, wear and tear on the vehicle etc. are extremely costly compared to the modest increase in the gas tax. And, those cannot be planned. Many times folks just add those costs to an already out of control credit card bill. Finally, if we don’t fix TTF, this will impact our property taxes. Infrastructure improvements are outside the cap. So, when the mayor of your town is faced with waiting for TTF $ to repair a road or bridge in town or repairing it because it is in danger of failing, he or she will do so for the safety of the residents and you will be paying higher property taxes to cover Trenton’s in action.

    Reply
    1. Taliaporia

      Remember immediate family are exempt from estate tax. Spouses, children and parents. And while I have a great respect for both Mr. Orr and Mr. Caruso the NJPP does solid data based research. It will take more than doubts to convince me to indict their research. Regardless, that is less the issue than the horse trading of two unrelated taxes. We are being blackmailed and should say no.

      Reply
      1. 12mileseastofTrenton

        Surviving spouses are exempt from estate tax. Not children.

        Reply
    2. 12mileseastofTrenton

      It’s not “hype.” And remember, they’re talking about eliminating it all together. Not raising the threshold to, say, $1 million.

      I’m particularly familiar with it now because my brother and I are in the process of paying it. The tax is less than 5% of the entire estate. Not a bad deal for money you did nothing to earn.

      Reply
  4. CreedPogue

    In most of the state, you don’t see many $600K estates.

    If we are saying that we don’t have enough revenue, then cutting taxes is problematic to start with. But, cutting the estate tax seems utterly crazy.

    Reply
  5. Dan Preston

    It is absurd to link a cut in the estate tax to a bill that’s supposed to raise necessary revenue for transportation. What on earth does one have to do with the other? Any effort to offset the impact of higher gas taxes should focus on the people most burdened by higher gas taxes, particularly the working poor. Cutting taxes for the heirs of the richest few percent as any element of this plan is absolutely the worst kind of reverse-Robin-Hood, and any Democrat who signs cannot be considered progressive.

    Reply

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