Senate President Sweeney to Business Leaders: No to Millionaire’s and Corporate Tax Hikes; Yes to $15 Minimum Wage
In a wide-ranging and lively address to business leaders, Senate President Stephen Sweeney said the state’s public employee pension deficit cannot be solved by raising taxes; he reiterated his opposition to a millionaire’s tax; and he said he no longer supports a state Corporation Business Tax increase that he once offered as an alternative to a millionaire’s tax.
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Further, he said he favors a $15-per-hour minimum wage, and, regarding one of Gov. Phil Murphy’s most high-profile proposals, Sweeney said, “Not one person has told me they want free community college. Not one.”
The Senate President’s remarks came during a breakfast roundtable on May 16 presented jointly by the New Jersey Chamber of Commerce and the New Jersey Business & Industry Association.
It came while the Legislature considers Murphy’s proposed $37.4 billion state budget for the upcoming fiscal year, which contains a record-high $3.2 billion payment to the state’s troubled public employee pension system, a program for free community college tuition, and a number of tax increases. The governor and the Legislature have until June 30 to adopt a state budget that goes into effect July 1.
“We can tax and tax and tax, and it’s not going to fix a damn thing,” Sweeney said. “All the tax increase (revenue) will go into pensions and health care for public employees, and the pension crisis still won’t be fixed.”
He added, “We raised the sales tax ten years ago. Did that solve the pension problem?”
The Three Biggest Parts of the State Budget: Pension. Pension. Pension.
Sweeney saved most of his remarks for the pension fund, which has one of the biggest deficits among states. And the shortfall grows annually, making it an increasingly large burden on New Jersey’s annual budgets. “We are getting to the point where all (the state budget) will be doing is funding pensions and health care,” Sweeney said. “We won’t be able to fund anything else. And when we don’t invest in our state, businesses leave.”
Sweeney said the pension system needs to be reformed, but he didn’t specify how or whether it would be done through legislation or through negotiations with the state’s public employee unions.
“We have to honor our pension promises, but we have to make changes,” Sweeney said. “There are too many ways (for public employees) to game the system.”
Still, he stressed that the blame for the pension deficit doesn’t sit with the workers. Instead, Sweeney alluded to the governors that have failed to contribute sufficient payments to the fund over the past two decades.
The Estate Tax, Millionaire's Tax and Corporation Business Tax
Sweeney said the state has made headway on improving the business climate, partly by phasing out the estate tax. “It was a big win,” Sweeney said. “It makes us much more competitive.”
Meanwhile, Sweeney said that Murphy’s proposed millionaire’s tax – a state income tax increase for those with income of more than $1 million – would make New Jersey less competitive. Sweeney reiterated his opposition to the hike. “We can tax millionaires,” he said, “but we are going to lose them and the tax revenue they generate.”
As for the Corporation Business Tax increase Sweeney once suggested as a less damaging alternative to a millionaires tax, he said, “I am not promoting it anymore. I would prefer not to do that either.”
$15 Minimum Wage
The Senate President said he is “very much in favor” of raising the minimum wage to $15 per hour. “The question is, ‘How are we going to do it?’
“It won’t be a clean 15,” Sweeney said. “There are going to be exemptions. I am concerned for small businesses, like the bagel shop with three employees.”
He spoke of a possible exemption for employees that are 18 and under. “When we go to $15 per hour, it must be done with thought and precision,” Sweeney added. “We don’t want to create a situation where we lose jobs.”
Other Thoughts from Sweeney:
- The final state budget will be the product of a compromise, Sweeney said, between him, Gov. Murphy and the Assembly Speaker. And Sweeney spoke highly of the new Assembly Speaker Craig Coughlin, who is the least known of the three. “He is a great guy, a smart guy and no pushover,” Sweeney said. “If you don’t know him, get to know him.”
- Sweeney does not understand Murphy’s drive for free community college. “Not one person has told me they want free community college,” Sweeney said. “Not one.”
- Sweeney said tax incentives for companies to grow and relocate in New Jersey “are necessary to compete” with other states. “Pennsylvania has the Keystone Incentives,” Sweeney said. “We must compete with that.”
- Sweeney discounted the notion of the state reneging on tax incentive payments that have already been promised to companies. “I have not heard of that but I would fight it,” Sweeney said. “The state must keep its promises.”
- Sweeney took pause at the breakfast to bask in a political victory. “Not one person who voted for the gas tax (increase) lost an election, and one who voted against it lost,” Sweeney said. “That makes me happy.”
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