Wednesday, August 11, 2004

New Jersey's war on employers 

The State of New Jersey, in a thousand different ways, has declared war on employers. This is an ancient story and the atrocities are legion, but in the last couple of days new outrages have piled up so I feel the need to rant:

Howard Bashman reports that the New Jersey Supreme Court has ruled that New Jersey employees may now sue employers for damages for "emotional distress" without proving "severe psychological harm" by dint of expert testimony. According to the Star-Ledger's account,
"We are convinced that the Legislature intended victims of discrimination to obtain redress for mental anguish, embarrassment and the like, without the limitation to severe emotional or physical ailments," the court said in its decision, written by Justice John E. Wallace.

In New Jersey you no longer have to find a psychiatrist willing to say that you've suffered harm -- hardly a high hurdle considering the professional "flexibility" of that medical specialty. You merely need to allege "embarrassment" to recover damages. That's a helluva of a pleading standard. Why not just go right to the "my boss was mean to me" cause of action and stop screwing around?

Then we get the weekly "Capitol memo" newsletter from our friends in Trenton, the New Jersey Business and Industry Association. It seems that we have a new tax:
As part of a new law to help defray the high cost of medical malpractice insurance, New Jersey has sent a bill of $3 per employee to all New Jersey employers that are subject to the State workers’ compensation law. This surcharge, which was opposed by NJBIA [apparently without success - ed.], will go into a fund to defray medical malpractice insurance costs for some medical providers.

It's not like three bucks is a lot of money, but precisely what relationship is there between employment and medical malpractice? Why not just tax everybody $0.50 for every tree in their yard, or an extra penny for every can of Diet Coke they purchase? Why not tax the doctors who actually commit malpractice, or trial lawyers who profit from the settlement of these cases whether the doctor did anything wrong or not? How is it that employers qua employers have anything to do with this mess?

Finally, the New Jersey Division of Taxation has instituted new payroll-tax withholding rates for employees earning more than $500,000 a year in gross income [that is, the people who employ other people - ed.], to take effect September 1. The new withholding rates are a result of the “millionaires-tax” increase that is retroactive to January 1, 2004. Beginning September 1 and for the remainder of this year, employers will be required to withhold 12 percent from employees subject to the new higher income tax bracket. Got that? Because the tax increase was retroactive, the marginal rate for income over $500,000 will go to 12% in New Jersey, up from 6.37%. For these admittedly wealthy taxpayers, New Jersey has already increased taxes more than the Bush tax cuts reduced them. Therefore, there has been no windfall for wealthy people in New Jersey, only a transfer of wealth from the federal government to Trenton.

Next year, the marginal rate will drop back down to 8.97%, which means that wealthy taxpayers will have given up to Trenton only about 60% of the Bush tax cut. Of course, since John Kerry has promised to repeal the Bush cut, New Jersey's most productive citizens will face substantially higher taxes under a Kerry-McGreevey Axis of Taxes than they did under Clinton-Whitman.

It's almost enough to make you move to New York.


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