Tax Foundation reviews upper-income tax increase impact
Upper-income New Jersey residents would pay $3.54 billion more in taxes next year if they see their tax rates increase and deductions reduced, according to a report released today by the nonprofit Tax Foundation.
President Barack Obama supports allowing tax cuts enacted under then-President George W. Bush to expire for couples with more than $250,000 in income and individuals with more than $200,000. Obama also would limit deductions for upper-income earners.
The report by the Tax Foundation, which advocates low tax rates, found that 1.15 percent of state residents' income would be paid under the increase.
While the total amount paid by upper-income taxpayers in New Jersey would be the sixth-highest of any state, the percent is the ninth-highest.
Upper-income New Jerseyans would pay an additional $69.8 billion over the next 10 years.
Report author William McBride wrote that businesses would be affected.
"Businesses are also directly affected by the president's proposed tax increases, since the vast majority of businesses file under the individual tax code," McBride wrote. "These so-called pass-through businesses — such as partnerships, S corporations and sole proprietors — earn more income and employ more workers than do traditional C corporations, which file under the corporate code."
California and New York residents would pay the most from the increase, while Wyoming and Connecticut residents would see the largest increase in the percent of income paid.
Gordon MacInnes, executive director of the nonprofit New Jersey Policy Perspective, said it was misleading to focus narrowly on the tax impact of Obama's proposal.
"President Obama and Governor (Mitt) Romney agree that the present path of debt accumulation is not sustainable, and you need to do something about it," MacInnes said, adding that the Tax Foundation report doesn't provide a balanced view of the potential benefit of balancing spending cuts with revenue increases. "It seems impossible, given the structure of the federal budget and how money is spent, that you can get on a sustainable path of spending and debt without balancing it with revenue."