'Robin Hood In Reverse': NJ Tax Cut Plan Is For The Rich, Critics Say

NEW JERSEY — On first glance, the “StayNJ” tax cuts seem to be chasing a noble goal: helping financially struggling seniors in New Jersey to stay in their homes. But if the plan crosses the finish line, it will end up giving huge tax breaks to the wealthiest homeowners in the state – while ignoring low-income seniors who rent their homes, critics say.

Last month, Assembly Speaker Craig Coughlin introduced A-1, a proposed state law otherwise known as the StayNJ program. Here’s how it will work, he said:

“Under StayNJ, the state would provide a 50% credit on seniors’ property tax bills, capped at $10,000. Homeowners who are 65 years or older would be eligible for the tax credit on their principal residence, and there is no income limit for eligibility. Payments would be applied directly to tax bills, with benefits starting on January 1, 2025.”

The plan also expands eligibility requirements for the state’s “senior freeze” property tax program. Read More: NJ Bill Cutting Property Taxes 50 Percent For Some Moves Forward

The proposal is working its way through the Legislature, where it has picked up support from Coughlin and Senate President Nicholas Scutari. A companion bill has been introduced in the Senate and referred to that chamber’s Budget and Appropriations Committee.

However, the administration of Gov. Phil Murphy – a fellow Democrat – has taken a strong stance against the plan, questioning its fairness and financial sustainability. The governor, a multi-millionaire and former Goldman Sachs executive, would personally collect $10,000 that he doesn’t need if the bill passes, his staff noted.

So would another of the state’s richest residents, according to nonprofit think tank New Jersey Policy Perspective (NJPP): Bruce Springsteen.

Last week, the group released a report that bashes the StayNJ plan, praising its stated goals but ripping into its potential effects. The NJPP didn’t pull punches in their analysis, calling the plan “Robin Hood in Reverse.” See the report online here.

According to the NJPP, the top 1 percent of households in New Jersey would receive more tax cut benefits than the entire bottom 20 percent under the plan.

“When looking at the total cost of the proposal — $2.2 billion, according to the Institute on Taxation and Economic Policy’s modeling — roughly 40 percent would go to the wealthiest 20 percent of residents, while only 5 percent would go to the lowest-income 20 percent of residents,” the NJPP said.

The program excludes renters entirely, advocates noted – which is ironic since they’re much more likely to need financial help.

It’s a fundamental flaw that is embedded deep in the program’s design, researchers alleged: With a $1.2 billion listed price tag that some say will be even higher, StayNJ would represent a “massive redistribution of wealth and state resources to the highest-income households in New Jersey.”

Black and Hispanic or Latino/Latina seniors are also more likely to rent, widening an already ugly racial wealth gap, the NJPP added.

More than 80 percent of white seniors own their homes in New Jersey, compared to only 41 percent of Hispanic/Latinx seniors and 49 percent of Black seniors.

• See Related: NJ Has One Of America's Worst Racial Wealth Gaps, Study Says

It isn’t only a matter of “fairness,” advocates contend: the StayNJ program would throw the state’s entire budget out of whack. According to the NJPP:

“To put the sheer size of StayNJ in perspective, its $1.2 billion sticker price is roughly equivalent to the entire budget for the state Department of Health. The bill also lacks funding for administrative costs associated with the new program at the local or state level, which could balloon the cost even further. The $1.2 billion fiscal note for StayNJ may also be an undercount: The Murphy administration estimates that the annual cost is closer to $2 billion, and NJPP’s analysis indicates a cost of $2.2 billion for the state, though we were unable to model the impact of ANCHOR given the lack of public data on who has received tax credits through the new program thus far.”

The debate over the StayNJ plan takes place as lawmakers are considering letting a controversial surcharge tax on wealthy corporations expire – potentially doling out hundreds of millions of dollars to some of the richest businesses in the state, advocates say. Read More: Arm Wrestling Match Over New Jersey's Business Tax Is Heating Up

There is no doubt that seniors in New Jersey – which has notoriously high property taxes – need a break, according to the NJPP. But there are other ways to give seniors a boost: expand outreach for enrollment in food assistance programs like SNAP, reduce health care and prescription drug costs, or increase funding for rent assistance, foreclosure assistance and housing counseling.

“This proposal would represent a historic and regressive transfer of wealth to some of New Jersey’s wealthiest residents, while doing little to solve the very real crisis of senior housing affordability in the state,” said Peter Chen, a NJPP senior policy analyst.

Some Republican lawmakers in the state have also thrown water on the StayNJ plan, including Assemblyman Brian Bergen (NJ-25).

Calling the plan a “gimmick,” Bergen said Republicans have argued that the plan’s discretionary spending won’t provide any real relief to struggling seniors, since it could be gone as soon as a recession happens.

“[New Jersey] residents deserve real structural change,” Bergen said.

• See Related: Critics Pan NJ Democrat's Plan To Cut Property Taxes For Seniors

Meanwhile, Coughlin and other supporters of the StayNJ plan continue to push forward, insisting that it will be an overall benefit for the Garden State.

“As we negotiate the final tenets of the proposed FY24 state budget, I am encouraged to see that we all agree more property tax relief is needed for seniors,” Coughlin said last week, after the Assembly version of the bill moved forward.

“I look forward to working with the governor, Senate president and our colleagues as we take the next step to making StayNJ a reality,” Coughlin said.

• See Related: NJ Mayor Lends His Support To State Tax Credit Plan For Seniors

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