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Time to index New Jersey’s gross income tax brackets annually for inflation

Trenton NJ, Senator Anthony M. Bucco said it’s clear the State can afford legislation he sponsors to provide inflation relief to New Jersey taxpayers after Governor Phil Murphy announced an extra $4.6 billion in tax collections this year that wasn’t expected.

“When the Murphy administration is sitting on a huge windfall of taxpayer funds, there’s no excuse for anyone to oppose providing tax relief to workers when they get small cost-of-living raises to account for inflation,” said Bucco (R-25). “I know Governor Murphy will never want to lower a tax, but it’s a small cost to the State when we’re swimming in money. It’s also the right thing to do to help low- and moderate-income families living paycheck to paycheck.”

In a recent NJ.com editorial, Bucco explained how tax bracket creep resulting from New Jersey’s static tax rates can leave families poorer from one year to the next when cost-of-living allowances that are intended to cover inflation push workers into a higher tax bracket.

Bucco’s legislation, S-676, would index New Jersey’s gross income tax brackets annually for inflation, as has been done by the federal government for over 40 years and by 37 other states.

During his Budget Message today, Governor Murphy announced that State revenues for the current fiscal year ending June 30 will be $4.6 billion higher than expected.

According to a fiscal note by the nonpartisan Office of Legislative Services, the legislation could reduce State income tax collections by $150 million to $440 million in the first year, assuming inflation of between two and six percent.

Bucco noted that the governor’s proposed budget doesn’t appear to stop automatic payroll tax and toll increases from taking effect in the next fiscal year.

“Families are struggling with higher grocery prices due to inflation and surging gas prices due to the war in Ukraine,” Bucco added. “It’s shocking that Governor Murphy would add to that burden by allowing unnecessary tax and toll increases to take effect when he already has billions he wasn’t expecting in the bank. He should look at our Senate Republican plan to give it back immediately to New Jerseyans who could use tax relief now.”

 

 

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