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September 30, 2015

Death and taxes: Should NJ trade the estate tax for a gas tax?

Christie says he may consider raising gas tax if other taxes are lowered

New Jersey Governor Chris Christie says he willing to consider raising the gas tax to help Jersey support its infrastructure, but only if other taxes, like estate or inheritance taxes, go down. 

But liberal think-tank New Jersey Police Perspective (NJPP) shot back, in a report released Monday, that such a plan would benefit "the state's wealthiest households" and threaten funding for "public colleges, safe communities, health care and other important services."

The report points out that only 10 percent of New Jerseyans are rich enough to have to pay estate or inheritance taxes when they pass beyond the land of the living. For example, only households worth $675,000 or above are subject to an estate tax. 

Meanwhile, the taxes bring in more than $600 million in revenue a year.

As reported, however, New Jersey and Maryland are the only states to have both an inheritance tax and an estate tax, which critics contend is redundant. The estate tax is taken directly from the dead person's estate, while the inheritance tax is paid by the inheritor (direct relatives are exempt).

Jersey's gas tax is 14.5 cents a gallon, the second-lowest such tax in the United States. Revenue from the tax goes to the Transportation Trust Fund, but the fund is deeply in debt and will lose the ability to borrow money in less than a year.

NJPP has proposed replacing the gas tax with the same seven-percent sales tax placed on other commodities, Newsworks reported.

Christie signed the Americans for Tax Reform pledge in August, promising to never raise taxes, but he can still keep his promise if taxes are offset to be "revenue neutral."