Explaining New Jersey Tax Increases

There seems to be much confusion about New Jersey taxes based upon articles, blog posts and various comments we’ve read. So here’s a little chart we’ve put together from Governor Jon Corzine’s proposed budget for 2007 that may help. Dollars are in billions.

Proposed New Jersey Budget 2007 – Dollars in Billions

New Jersey income tax revenue will increase by 10.72 percent or $1.235 billion without any change to tax rates or laws.

The 24.73 percent increase in sales tax revenue, equal to $1.661 billion, is attributable to a 3.4 percent increase in taxes from additional retail purchases, plus a 21.33% increase in the state’s sales tax structure. Governor Corzine’s sales tax increase is achieved in two ways – extending the sales tax to previously untaxed goods and services and by increasing the sales tax rate from 6 to 7%.

Corporate taxes will actually decline by $282 million to $2.53 billion , due to previously enacted changes in New Jersey corporate tax law. However, this tax cut will be mitigated by a Corzine proposed corporate surcharge of 2.5 percent.

Corzine has proposed changes to various other taxes and fees, but revenue from these other sources remains at about a breakeven at $8.137 billion, a proposed increase of $46 million over last year.