New Jersey families say an increased sales tax would make life worse

These days, as grocery and energy costs climb, Flemington residents Sherrill DeGenova and her husband, Michael, are being especially careful with their money. 

They’re not in an emergency financial situation, but there are signs that the economy is moving in a worrisome direction for them, explained DeGenova, a retired speech therapist who, along with her husband, relies on Social Security and Medicare. They are also caregivers for their 30-year-old son, who has autism. Their daughter, who previously had breast cancer and had to declare bankruptcy due to medical costs, lives with them as well.

“The funding that we have is very limited, and I’m already feeling it just from the end of the summer because power went up. Our oil went up. We don’t have gas, but our electrical went up,” DeGenova said.

Food bills, too, have soared for her family. For every $100 they had been spending at the grocery store, they’re now paying about $150, DeGenova said. 

It’s not just that food and electricity costs are increasing. The DeGenovas are deeply concerned about changes to their son’s Medicaid benefits after congressional Republicans and President Donald Trump slashed funding for the national health insurance program that provides coverage for lower-income individuals, people with disabilities, and eligible pregnant people, among others. The GOP lawmakers and president carved about $1 trillion from Medicaid over the next 10 years as part of their One Big Beautiful Bill Act, which state officials said could result in 300,000 New Jersey residents losing health care coverage.

“Our son, who’s autistic and intellectually disabled, he uses Medicaid for everything,” DeGenova said. “Otherwise, it’s out of pocket for us. So, a day program, a job coach to keep him on track and keep him safe for the 10 hours a week that he works.”

If costs continue to rise, or there are changes to their health care benefits, their financial situation could become much more precarious, DeGenova said. That’s why she is worried about Jack Ciattarelli, the Republican candidate for governor in New Jersey, saying he’s open to changing the tax structure in the Garden State, which could include eliminating the state income tax and increasing the sales tax to 10%, according to audio captured during a campaign rally in Bergen County. Ciattarelli is running against U.S. Rep. Mikie Sherrill, the Democratic nominee for governor, in the Nov. 4 election.

After Greater Garden State, a super PAC, launched an ad on Sept. 3 that attacked Ciattarelli for his comments at the June campaign rally, the Republican candidate said he’s not proposing a 10% sales tax; rather, he said, he wants to explore what tax options are available.

“Listen, given the tax structure in New Jersey, it does not work,” Ciattarelli said in response to a question from NJ Advance Media. “And so I think all options should be on the table. But that doesn’t mean I’m putting in a 10% sales tax, including on food and clothing.”

Currently, New Jersey assesses a 6.625% sales tax on “most tangible personal property, specified digital products and certain services unless specifically exempt under New Jersey law,” the state Division of Taxation’s website notes. Most grocery store food items and clothing are exempt from the sales tax.

Wintischa Wilson, a community activist from Rahway, said an increased sales tax would further stress New Jerseyans who are already dealing with rising costs. A Rutgers survey released in July found that half or more of New Jerseyans are struggling to afford necessities like groceries, rent, health care, utilities, and mortgage.

“Now everything is up: the food, the taxes,” Wilson said. “It’s crazy for people that just have a normal nine-to-five, making about $40,000, $53,000 a year.” 

“If you make the tax even higher, what are we supposed to do?” she continued. “The food pantry lines are definitely getting longer.”

States that get rid of their income tax still have to find ways to make up for that loss of revenue and pay for public services like roads, health care and education. Texas, for example, has no income tax but has the country’s seventh-highest property tax rate, according to the Tax Foundation. Washington state, which also doesn’t have a personal income tax, has the fourth-highest sales tax rate in the country, according to Kiplinger, a publication that focuses on business and finance.

Lower-income residents are typically hit the hardest financially when a state eliminates its income tax and instead relies on revenue from an increased sales tax, according to a 2023 paper published by the National Conference for State Legislatures. Those with lower incomes typically spend about three-quarters of their earnings on items that are subject to sales tax, while higher-income earners spend about a sixth of their income on taxed items, the report said.

Dan Cassino, a professor of government and politics at Fairleigh Dickinson University, noted that a consumption tax-based system, which includes sales tax, is more vulnerable to changes in the economy than an income tax-based system.

“Even when the economy is bad, people are still earning money,” Cassino said. “They just might not be spending as much money. However, if you have a totally sales tax-based system, when people stop spending as much money, then government revenue falls, and that’s a real problem.”

New Jerseyans are struggling in this economy, with people working two or three jobs to make ends meet, Wilson said. Housing costs are forcing people to live in overcrowded conditions or lose their housing altogether. Wilson knows of others who are moving south because they can no longer afford to live in New Jersey. An increased sales tax, and a new sales tax on food and clothing, would only exacerbate those issues, she said. 

“You see elderly being more homeless than anything right now,” Wilson said. “You see elderly people going through a lot more struggles than they used to. You see children having less and less food on their tables.”

As for DeGenova, continued increases in costs of necessities like food could force her and her husband to choose between paying for their own needs and the out-of-pocket costs they currently cover for their son, such as horseback riding, which is immensely beneficial for him.

“What would happen is that we would have to really look hard at, well, how much does this benefit him?” DeGenova said. “And would we stay with paying for that out-of-pocket versus what we would do without, what my husband and I would do without.”