TRENTON – Tax revenue collection are 3.8 percent above projections for the first five months of the fiscal year, according to state Treasurer Andrew Sidamon-Eristoff.
Income tax collections – the largest source of state revenue – are running 12.7 percent above projections for the fiscal year, which began July 1. Sales taxes – the second biggest revenue source – are still 1.4 percent below conservative forecasts.
“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. “This may signal that income taxes aren’t rising solely because of an improved economy. Instead, a substantial portion of the rise in income tax collections may be attributable to tax strategies employed by high-income earners.”
According to Sidamon-Eristoff, some taxpayers may have been trying to shift income from 2011 to 2010 because of uncertainty about federal tax rates next year. The treasurer also noted that some firms have reportedly been awarding staff bonuses early to give employees extra money for holiday shopping.
These factors could reduce revenue growth for the balance of the fiscal year, Sidamon-Eristoff warned. “Collection during the first four months of calendar 2011 will determine whether the faster growth we’re seeing in New Jersey incomes is real and can be sustained,” he said.
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