By Donald Gilpin

Sheila Reynertson, senior policy analyst for New Jersey Policy Perspective, warned a gathering of Princeton Community Democratic Organization (PCDO) members and others at the Suzanne Patterson Center Sunday night that the new tax bill is a bad deal for most New Jersey residents and that the majority of benefits accrue to the wealthiest five percent.

In addition, she noted, the bill’s increasing price tag, now estimated to be about $1.9 trillion, up from $1.5 trillion a year ago, exacerbates the impact on middle-class and low-income Americans by putting increased budget pressure on vital programs like Medicare, Medicaid, SNAP, and housing support.

Reynertson shared the podium with Karen A. Artasanchez, a CPA and tax professional at Wilkin & Guttenplan, who presented information on how tax legislation impacts individuals. 

Reynertson pointed out that personal
income tax (PIT) changes under the GOP-Trump law, mostly temporary through 2025, present new PIT brackets and lower rates, with the top rate lowered from 39.6 percent to 37 percent. Also included are an increase in the standard deduction, repeal of personal exemptions, a $10,000 cap on state and local tax deductions, increased child tax credit, a new 20 percent deduction (with limits) for passthrough business income, and a slower rate of inflation.

Corporate income tax changes, mostly permanent, lower the tax rate from 35 to 21 percent and repeal the alternative minimum tax.  Estate taxes see the exemption doubled to $11M for singles and $22M for married couples. 

Reynertson emphasized that the richest New Jersey taxpayers will receive an outsized share of the tax cuts in the final GOP-Trump tax bill, arguing that although the richest 1 percent of N.J. families, averaging annual income of $2.5M, would pay an average additional PIT of $34,290 due to the cap on state and local tax deductions, that increase would more than be made up by tax cuts from estate tax and corporate tax changes to result in a net average tax cut of $21,700 for the wealthiest. 

In addition to giving larger tax cuts to upper-income N.J. residents in 2019, Reynertson said, the new tax bill will raise taxes on low-and middle-income residents in 2027.  She went on to argue that corporate tax cuts are giving huge windfalls to CEOs and wealthy stockholders, but have failed to boost wages, create jobs, or spur investment.

Her six-month report card on the GOP-Trump tax cuts reported that four out of five workers in the private sector saw average hourly wages go down after inflation and that only 2.6 percent of New Jersey’s 4.3 million workers (4 percent nationwide) have been promised one-time bonuses or wage increases.

In presenting highlights of the new tax laws, Artasanchez discussed individual provisions, including rate changes, itemized deductions, and children and education; then commented on small business provisions, including qualified business income deductions and depreciation provisions. 

In answering questions from the audience, Artasanchez declined to comment when questions pertained more to policy issues than to the application of the law.

Last week the PCDO also celebrated the grand opening of Congresswoman Bonnie Watson Coleman’s Blue Wave Campaign headquarters on Alexander Street on September 12 and held a fundraiser for Princeton Council candidates Eve Niedergang and Dwaine Williamson on September 15.