From the 12/02/16 edition of the Weekly State Tax Report:
Some of the biggest state tax changes of 2016 took place in New Jersey, where a protracted debate over the state's need to update its gas tax and the desire of some leaders to cut other taxes ultimately resulted in a $1.4 billion tax shift. Overall, New Jersey solved a few problems but created or exacerbated just as many.
New Jersey's gas tax had not been adjusted for inflation or rising costs since 1990, slowly wearing down the solvency of the state's Transportation Trust Fund (TTF) over the course of a quarter-century. By September 2015, Gov. Christie (R) and others started staking out the tax cuts they would demand in return for a gas tax increase, focusing on estate, inheritance and sales taxes.
The final compromise enacted in October included a gas tax increase, estate tax elimination, a sales tax rate cut, an expansion of the existing retirement income exclusion and an increase in the state Earned Income Tax Credit (EITC). The tax cuts add up to about $1.4 billion, the amount the gas tax increase raises, so this amounts to a shift in who pays taxes in New Jersey and where that revenue goes.
Dylan Grundman, a senior policy analyst at the Institute on Taxation and Economic Policy, discusses the details of New Jersey’s 2016 tax changes and how they both solved and exacerbated some of the state's problems in this week’s BNA Insights article, available here (subscription required). Or sign up for a free trial to the Weekly State Tax Report.
Compiled by Lauren E. Colandreo
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