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Quigley: State lawmakers looking to increase taxes on lottery winners and new casinos


December 8, 2014 
Joan Quigley 
Displayed with permission from NJ.com 

Mohammad Ansari is the general manager of Faber News Now in the Secaucus Junction train station where a $12.8M Pick 6 lottery ticket was sold. Reena Rose Sibayan/The Jersey Journal 

If they can’t get money out of rich folks one way, some New Jersey lawmakers have a few other ways in mind.

Every June, Gov. Christie crosses out lines in the state budget that would increase taxes on millionaires or semi-millionaires. And every year unsurprised Democrats talk about all the ways they think that extra income should have been spent.

This year Sen. Ronald Rice, D-Essex, and Sen. Paul Sarlo, D-Bergen, are trying a new tack. They suggested alternate ways to get their hands on some wealth for the treasury.

Rice’s bill, which was advanced by the State Government, Wagering, Tourism and Historic Preservation Committee in the Senate in June, would increase taxes on lottery winnings by half a percent. If enacted, it wouldn’t apply only to the lucky folks who win a million or more, but would be imposed on any winnings over $600.

Although he is not predicting the amount of money that could be raised, Rice would restrict the use of that additional income to support after-school programs in urban areas.

Right now in New Jersey lottery winnings are taxed on a sliding scale that tops out at 10.8 percent. According to the Tax Foundation, New Jersey’s lottery taxes are the highest in the nation, but in New York City winners actually pay more because there’s an 8.8 percent state tax rate plus an additional 3.8 percent city rate.

Pennsylvania does not tax lottery winnings at all. However, the federal government treats all lottery winnings as ordinary income with rates as high as 39.6 percent. 
Sarlo, who heads the Senate Budget Committee, has long advocated for casino gambling in the Meadowlands and may support gambling elsewhere in north Jersey. But he wants a whopping 66 percent tax imposed – not on the winners but on the casinos themselves.

When eyes popped and jaws dropped as people heard the numbers, Sarlo acknowledged 66 percent might be a little too high, but he thinks new casinos ought to pay much more than Atlantic City casinos are paying now. Their tab is 9.25 percent. That’s eight percent on their gross revenues and 1.25 percent as an “investment alternative tax.”

Taxes raised under Sarlo’s plan would be split among the state’s general fund, the Casino Reinvestment Development Authority, and the Hackensack Meadowlands Tax Sharing Stabilization Fund. Since its establishment in 1984, the CRDA spent more than $1.5 billion on projects in Atlantic City and $300 million more in other towns. But Atlantic City casinos fell upon hard times lately because of growing competition in nearby states and several have already closed.

The Meadowlands Commission always is the topic of much discontent, with communities where development is allowed paying into a fund used to compensate communities where preservation of wetlands prevents new developments. Despite periodic revisions to sharing formulas, no community ever felt it was being treated fairly.

Although both bills are well intended and would address problems that sorely need being addressed, their chances of passage any time soon are close to none unless they are modified. The Rice bill is unlikely to get support from lottery players anywhere and can expect opposition from suburban representatives unless after-school activities in those communities receive some help, as well.

Sarlo is right to try to get ahead of casinos opening in New York City, but it will be difficult to woo casino owners here if the state will scoop up two thirds of the gross revenues. Some states do tax as much as 60 percent, so his good idea can succeed with a bit of tinkering. 

EDITOR'S NOTE: A former state assemblywoman from Jersey City, Joan Quigley is the president and CEO of the North Hudson Community Action Corp. in Union City. Her column appears in The Jersey Journal every Tuesday.