Income tax revenue is 12.7 percent over estimates through five months, but sales tax revenue did not meet its goals
State Treasurer Andrew Sidamon-Eristoff testifies at a Senate Budget Committee hearing in this file photo.TRENTON — New Jersey tax revenue is outpacing projections by 3.8 percent in the first five months of the fiscal year, the Treasury said yesterday.
However, there are signs that even though residents are earning more, they’re not spending their wages.
The income tax brought in the most money, and delivered revenue 12.7 percent over projections. But sales tax dipped 1.4 percent below projections, a concern for state Treasurer Andrew Sidamon-Eristoff.
"At the risk of sounding overly pessimistic, I’m concerned that sales taxes are down at the same time that income taxes are up," Sidamon-Eristoff said in a statement. "This may signal that income taxes aren’t rising solely because of an improved economy."
He said the boost in income tax revenue may be inflated by wealthy residents trying to shift income from 2011 to 2010 to circumvent any potential increase in federal income taxes. For example, some companies have awarded bonuses early.
However, such income shifts might not be necessary if the Bush-era tax cuts are not allowed to expire. A deal between President Obama and Congressional Repbulicans extending the tax cuts is set to pass the U.S. Senate before heading to the U.S. House of Representatives.
Assemblyman Joseph Malone (R-Burlington), the senior Republican member on the budget committee, said he’s not surprised sales tax has remained low.
"If you’ve been through a tough period of time . . . you are going to be a little skittish about spending the money," he said. "That seems reasonable."
Malone credited Republican initiatives with increasing the state’s tax revenue.
"It’s a good indication that the policies of the Christie administration are starting to turn this state around," he said. "We’ve finally gotten to the point where things are going to start to get better."
Assembly Budget Chairman Lou Greenwald (D-Camden) said revenue data shows the expiration of the millionare’s tax earlier this year has not boosted spending and helped the economy.
"The question still holds, is this trickle-down theory is going to work," he said.
New Jersey budgeted for $9.46 billion in tax revenue in the first five months of the fiscal year. Instead, it received $9.82 billion. The corporation business tax also lept 14.3 percent above projections.
Greenwald (D-Camden) said he hopes excess revenue is redirected toward municipal and school aid to help lower property taxes.