Why the ‘fairness’ of the gas tax deal is anything but: Jeff does the math

In a late-Friday deal heading into a three-day weekend for some, Gov. Chris Christie stood with state Senate President Steve Sweeney and Assembly Speaker Vincent Prieto to announce a deal struck on funding the broken Transportation Trust Fund.

Yes, a gas tax hike.

When the votes come in, New Jersey will go from having the second-lowest gas tax in the country to the seventh-highest. A 23-cents-per-gallon hike. From 14.5 cents to 37.5 cents.

All along, the governor said he would not sign off on any gas tax hike that wasn't part of a package of "tax fairness." He said he wanted offsetting tax cuts in other areas. First of all, considering the sanctity of the Transportation Trust Fund was never taken seriously by your politicians and the fund was routinely raided to pad budgets, what the hell does it matter where the money comes from?

In other words, if you had $10 in one pocket and the other pocket, the TTF pocket, were empty, does it make any sense to put a new ten dollar bill in the TTF pocket while taking the other ten out and giving it away? No, it doesn't and it never did make sense. If they could afford tax cuts from that other pocket, then they didn't need that fresh $10 bill. Just move that $10 to the other pocket. Apparently the Transportation Trust Fund was treated like a one-way box where money could be taken out of it when it shouldn't have been but never put back into it from those other budget areas. When all the rhetoric has passed it still makes no sense.

Okay, so let's buy into this "tax fairness" idea for a moment. Even if it could make sense, does it make sense for the average person? No, it doesn't.

Here's the math:

AAA has estimated the 23 cents gas tax increase will cost the average driver in NJ $170 per year. Many drive far more than that, many less. Remember this is an average. So keep that $170 in mind.

Part of the compromise is the so-called death tax, which is Jersey's estate tax, goes away entirely by 2018. It's The estate tax is a tax on what you leave to your loved ones when you die. Right now there is no tax until one dollar more than $675,000 you leave behind.

How many estates are subject to this tax in any given year? Only 4 percent. So 96 percent of estates are not large enough for this tax to even kick in anyway. On Jan 1 that $675,000 goes to $2,000,000. In other words, until what you leave your loved ones is one dollar over $2,000,000, there is no tax. Then a year later, the tax is gone entirely. Of course a year later we're also going to have a new governor likely from the Democratic party so we'll see if that gets rescinded. Anyway, key to remember here is without any change at all, even the current estate tax does not apply to 96 percent of estates. So this is not the average person.

The next big item is the sales tax. Currently 7 percent, it will drop on Jan. 1 to 6.875 recent then a year later to 6.625. Let's take the full .375% savings on sales tax. How much would you have to spend in a taxable purchases for your .375% cut to equal and offset the $170 per year in gas tax increase?

$45,350.

Yes, you'd have to spend $45,350 every year on taxable purchases to offset the gas tax hike. $45,350 x .00375 = $170.06. Now does that mean the average person? Again, not even close

The only remaining factors are the lesser talked about veterans' exemptions, tax break on retirement income, and a small tax credit for working poor. The average, middle-class working person loses out on this deal. For these folks, the average New Jerseyan, there is no tax fairness.

— Jeff Deminski

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