FOR IMMEDIATE RELEASE: May 25, 2016
Contact: Jon Whiten, NJPP: 609-393-1145 ext. 15 | whiten@njpp.org
Report: In Every County, Very Few New Jerseyans Owe Estate Tax
Boosting the EITC a Better Option for Tax Fairness
In 20 of New Jersey’s 21 counties, fewer than 400 heirs have estates large enough to owe the estate tax in any given year – and in the majority of counties, including every one in the southern part of the state, fewer than 200 heirs owe the tax, according to a new reportreleased today by New Jersey Policy Perspective (NJPP).
The report comes a week after the news broke that New Jersey is facing a $1 billion budget hole in the next 14 months, and in the midst of an ongoing campaign by the governor, some legislators and business lobbying groups to eliminate this tax on inherited wealth. Despite the fact that doing so would cost New Jersey $550 million in annual revenue, last week a leading Senator behind this push said efforts to eliminate the tax would continue, despite the state’s dire and worsening financial condition.
“Seeing how few people actually owe estate tax in each county reinforces the fact that wiping it off the books would benefit only the fortunate few and do actual harm to rest of New Jerseyans,” said Sheila Reynertson, NJPP’s Senior Policy Analyst and author of the report. “At a time when we get warning sign after warning sign about how broke New Jersey is, pulling $550 million a year out of our coffers is a big step in the wrong direction.”
The share of heirs that owe estate tax varies by county, from a low of 2.2 percent in densely populated Hudson County to a high of 9.1 percent in wealthy Morris and Somerset Counties. When fewer than 1 in 10 heirs in New Jersey’s wealthiest counties owe the estate tax, it’s laughable to assert that eliminating the tax will help the “middle class.”
Supporters of eliminating New Jersey’s estate tax think it must be part of a package deal to increase the fuel taxes needed to repair and maintain New Jersey’s deteriorating highway and transit networks in the name of so-called “tax fairness.” But eliminating the estate tax would leave New Jersey with $550 million less each year, seriously threatening support for things like public colleges, safe communities and health care.
If real “tax fairness” is the goal, it would be better served by enacting an increase in the state’s Earned Income Tax Credit, which would help offset the fact that low-income and working-class New Jerseyans would pay a higher share of their yearly earnings in fuel taxes than would more well-off households.
And the number of EITC recipients dwarfs the number of estate tax payers. The estate tax repeal would give a tax break to just 3,000 to 4,000 well-off households per year, the majority of whom live in a handful of New Jersey’s wealthier counties. Raising the state EITC would help nearly 600,000 households across the entire state – and cost about one-tenth as much as eliminating the estate tax.
“Eliminating the estate tax in no way guarantees that elderly residents will stick around to enjoy New Jersey winters. That’s fantasy,” said Gordon MacInnes, NJPP’s President. “But raising the EITC guarantees immediate fairness for low-income and working-class New Jerseyans who would actually notice the hit to their wallets from higher fuel taxes, unlike the state’s wealthiest households.”
