Business groups pan millionaire’s tax, see hope for tax cut compromise

Business advocates had equally strong reactions to two tax proposals from Democratic legislators that emerged on Thursday: in favor of tax cuts and opposed to a millionaire’s tax.

Business advocates had equally strong reactions to two tax proposals from Democratic legislators that emerged on Thursday: in favor of tax cuts and opposed to a millionaire’s tax.

Assemblyman Louis D. Greenwald (D-Voorhees) said there would be an Assembly proposal to set aside $183 million for property tax cuts, although they would depend on the state meeting administration revenue projections. A Senate Democratic spokesman said the Senate would also make tax cuts dependent on reaching revenue goals.

In addition, Greenwald said the Assembly would move to raise $800 million for property tax credits by raising the income tax rate on residents’ income above $1 million from 8.97 percent to 10.75 percent. Senate leaders have discussed this proposal, according to the spokesman.

New Jersey Chamber of Commerce President Thomas A. Bracken said the millionaire’s tax is a bad idea.

“It’s just pure politics, it’s just pure window-dressing and there’s just no reason for it to be brought up,” Bracken said. While Bracken said a comeback is occurring in the state’s economy, “a millionaire’s tax will grind it to a halt.”

Bracken said businesses would like to see a tax cut.

“It gives people the impression that somebody cares about them and the whole psychological impact of that is significant,” Bracken said, adding that having a cut this year would increase the possibility of more cuts in future years.

“If you start by understanding the need for tax cuts, then next year they will look at other ways to cut taxes,” Bracken.

He took a dimmer view of basing the cuts on meeting revenue targets, saying that the state should do everything possible to cut spending before paring back tax reductions.

“Make every effort to get it done in the budget,” Bracken said. “If that means cutting expenses, then cut everything that could be cut.”

New Jersey Business & Industry Association First Vice President David Brogan said a millionaire’s tax would encourage high-income residents to leave the state. He added that the tax impact from one resident with income above $10 million leaving the state is significant.

“We have never, and will never, support a millionaire’s tax,” Brogan said, adding that he has no doubt that Christie would veto it.

“I think the Legislature and the governor have done a tremendous number of things to change the perception of New Jersey,” Brogan said. “An income tax hike is going in the wrong direction.”

Brogan said the NJBIA supported Christie’s original proposal for a 10-percent across-the-board income tax cut because it would benefit everyone. Senate President Stephen M. Sweeney‘s 10-percent property tax cut would be limited to residents with less than $250,000 in income.

But Brogan is hopeful that a tax cut compromise can be reached that would add to the business community’s confidence in the state’s direction.

“No one can guarantee that we are going to reach certain benchmarks with regards to revenue figures, what we can say is that there’s an increasing level of optimism in the business community,” Brogan said. “Optimism breeds confidence, and confidence leads to investment hiring and expansions.”

Commerce & Industry Association of New Jersey Vice President Diane Walsh said the millionaire’s tax would hit small businesses hard.

“The business community has always been opposed to the millionaire’s tax increase because it increases the burden, it has a very chilling effect on the business climate in this state and it would really be a step backward at this point,” she said.

But Walsh said business owners are pleased that a consensus is building around tax cuts.

“It’s what everyone needs at this point, as everyone is trying to recover from the debilitating effect of the recession and we’re very hopeful that it can be accomplished,” she said. “It seems like there is room for all sides to come to a consensus, except for the millionaire’s tax. I don’t think that’s going anywhere.”

Chamber of Commerce Southern New Jersey Executive Vice President Kathleen A. Davis said the conversation over taxes has largely moved in a positive direction.

“It’s wonderful that we’re talking about tax cuts instead of tax increases, but the ‘but’ to that is the millionaire’s tax,” Davis said.

Davis described the tax cut compromise that is being considered as a “step in the right direction.”

However, Davis said, it’s a mistake for the state to raise taxes on residents who are already paying a large share of taxes. She noted that high-income residents can often change their residence easily. In some cases, Davis said, the cost of a condominium in a lower-tax state can be less than the savings in taxes.

“It’s just unfathomable that we’re talking about that again,” she said.