Today, the governor wants to squeeze a billion dollars from New Jersey businesses, doubling their share of the tax burden. But if New Jersey needs more taxes as a result of the economic slowdown and 9/11, the Governor should have all residents share by broadening the tax base. One method is my surtax proposal, which could be shown as a separate line item on tax returns and phased-out as the economy recovers.

Here’s how the surtax would work. Let's assume that we need another $450 million to plug the hole in the budget. We expect to raise $9 billion from the individual gross income tax and the CBT. Simply add 5% surtax computed on one's current tax. Thus, corporations will be taxed at an effective rate of 9.45% instead of 9%, and individual rates will rise from the current rates of 1.4% through 6.37% to 1.47% through 6.6885%. Everyone does his or her share and pitches in. After all, isn't that what democracy is all about? But to really win the support of everyone, lets make sure that most people will actually pay less!

New Jersey wage earners have up to $217 of unemployment and disability taxes withheld on the first $23,500 of income in their paychecks. We know these funds are over-funded because governors and lawmakers have been raiding them for years! I propose that we cut the employee share of these taxes by 0.1%. That would save $23.50 per year for each employee making over $23,500 and $47 for each family with two wage earners.

A New Jersey family of four making $65,000 will have New Jersey taxable income of approximately $55,500, after taking deductions for exemptions, real estate taxes, medical expenses and so forth. The New Jersey Gross Income Tax on such a family is currently $940. The surtax, which would add $47, would be offset by the reduction in their unemployment and/or disability taxes. Hence, no Net Tax Increase. And, those beneath the $55,500 level of taxable income will actually pay less in overall taxes.

I have here a reprint of my April 22, 2002 article in Business News that describes the surtax proposal and ask that it be incorporated into the record.

I would like to thank the Committee for holding these hearings to secure the public’s input.