Legislation Prevents Stealth Income Tax Increase Caused by Tax Bracket Creep
Legislation sponsored by Senator Anthony M. Bucco and Senator Steven Oroho that would protect New Jerseyans from tax bracket creep due to inflation has been advanced by the Senate Budget & Appropriations Committee.
Legislation sponsored by Sen. Anthony M. Bucco and Sen. Steven Oroho that would protect New Jerseyans from tax bracket creep due to inflation has been advanced by the Senate Budget Committee. (Pixabay)
“Our bill will protect New Jerseyans from paying higher income taxes due to inflation and provide tax relief to the many New Jerseyans who live paycheck to paycheck,” said Bucco (R-25). “When Governor Murphy has an extra $3-4 billion in tax collections he wasn’t expecting, our legislation is one way we can start to give it back to struggling New Jerseyans. We need to show people that Trenton is finally getting serious about addressing their affordability concerns.”
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 and Oroho’s measure, S-676, addresses the problem by indexing New Jersey’s gross income tax brackets annually for inflation, as is already done with federal tax brackets.
“Soaring inflation is making everything more expensive for New Jerseyans,” added Oroho (R-24). “Workers shouldn’t get slammed by higher tax rates when they get cost-of-living allowances that are meant to cover those higher costs, especially when the Murphy administration has billions in the bank. We should give it back and provide real tax relief to New Jereyans.”
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.
Governor Murphy is expected to announce during his upcoming Budget Message on March 8 that State tax collections will be as much as $4 billion more than his administration projected for the current fiscal year.
“We can afford this tax relief and a whole lot more,” Bucco added.
Senate Republicans recently launched the #GiveItBack initiative tell Governor Murphy to give back the billions in extra taxes he’s collected to New Jerseyans.
More than 4,600 New Jerseyans have already told Governor Murphy to “Give It Back” at http://www.giveitback.us.
Related Facebook Post: