Real tax relief has been absent in New Jersey for nearly two-decades. The only policies on the table in the legislature increase spending and, consequentially, increase taxes. The Assembly Republicans want tax savings for seniors, low- and middle-income families, and businesses. Lower taxes and cheaper goods stimulate and foster a prosperous economy.
We want to put more money in the people’s pockets because prosperity starts with them, not the government.
Lower and Stabilize Income Taxes:
End the marriage penalty. Eliminating the 2.45 percent bracket under married filing jointly and doubling income in the 1.75 percent bracket to $40,000; saving low- and middle-income couples hundreds on their tax returns. New Jersey is one of 24 states with a marriage penalty built into its tax brackets.
Index income taxes to inflation. Income tax brackets increase with annual inflation so those who get raises based on inflation don’t enter a higher bracket, thereby increasing their tax burden despite not actually making more money. It is an un-enacted tax hike mostly affecting the low- and middle-class.
Providing savings for low- and middle-class families:
Income tax deduction for college savings. NJBEST is the state college savings account. There is no deduction for contributions to it, making saving for college a zero-sum game with people sacrificing earnings today to save for tomorrow. This provides a deduction of up to $15,000 for families making below $250,000, or $125,000 if single income – so it only goes to low- and middle-class families.
Exclude retirement contributions as taxable income. This bill will allow all public and private employees to exclude contributions to a pension or general savings retirement account from income taxation, and provides a deduction for contributions to IRAs. New Jersey is one of three states to not already allow this as the federal government does. The expanded options to save without reducing income will be a boon to those who struggle to fund their golden years.
Deductions for home repairs. The bill creates a new definition so repairs don’t artificially increase the value of the home, and consequentially property taxes. This will help people replace a roof or fix a garage door without risk of increasing their tax burden – a concern for low- and middle-income taxpayers who don’t have the savings to pay for a much needed repair.
Cut unemployment insurance taxes in half. The unemployment insurance fund has a nearly $2 billion surplus, which enabled Gov. Christie to give businesses a $380 million tax cut last spring. This lowers the taxable wage base from $33,500 to $16,750 – a significant tax cut for small businesses.
Codify the Red Tape Review Commission. This bipartisan commission has eliminated thousands of regulations on businesses since its inception in 2010. The bill simply codifies the commission to continue its progress under future administrations.
Revise the definition of independent contractor. New Jersey has a three-level test to determine employee status, which has important legal consequences under tax and labor laws because of different classifications under state and federal law. This will simply define independent contractor as a person who is free from control over performance of service under contract.
Cost-benefit analyses of state government every 5 years. The state auditor will conduct a cost-benefit analysis of every agency or authority that is appropriated more than $1 million. It will provide the governor and legislature with the information, data and knowledge to know where we are wasting money in government and how to more effectively spend it – enabling spending cuts and consequentially lower taxes.
For example, Washington state found that it could save $2.7 billion over 50 years through a cost-benefit analyses of its criminal justice programs, and a cost benefit analysis in New Mexico resulted in reforms creating a return on investment of $26 for every $1 spent.