Friday, March 20, 2009
Circle jerk of taxation: New Jersey nullifies the federal stimulus
In the middle of a severe recession, New Jersey's fiscal condition is so poor as a result of years of mismanagement and corruption in state government that our governor is proposing massive tax increases. The top marginal tax rate in New Jersey is going to 10.25%, along with increases in state payroll taxes, a 25% increase in the tax on alcohol, and other revenue-raising, growth sucking taxes.
So let me get this straight: The Democrats in Washington are borrowing incremental trillions of dollars (a reduction in savings) so that we can stimulate the economy, while Democrats in Trenton are raising taxes (and dampening consumption) in substantial part to fund pension plans that will effectively "save" money at the expense of immediate economic activity. That is nullification of the stimulus, is it not? It seems to me that people who object to Sarah Palin and other conservative governors who reject stimulus funds would do well to level the same criticism at Governor Corzine.
9 Comments:
By 
, at
Fri Mar 20, 05:58:00 PM:
Corzine continues his press forward to alienate everyone in the state not a member of a public employee union. We'll see how the political calculus plays out, in the election and in migration patterns.
By 
Escort81, at
Fri Mar 20, 06:38:00 PM:
So, let me understand this: the top combined marginal income tax rate in NJ is now going to be over 50% (39.6% + 10.5% = 50.1%). I realize this is perhaps a slight oversimplification, since it does not take into consideration the deductibility of state income taxes when calculating federal income taxes (although there may well be an lower threshold for the phase out of such deductions).
What is the total tax burden in dollars and per cent (federal income tax, FICA, state income tax, property tax, sales taxes paid at retail) on someone living in in a mid-priced home in Princeton or Lawrence Township, NJ, with, say, $425,000 in AGI?
By , at
Fri Mar 20, 07:13:00 PM:
The Dems are over in New Jersey if they go ahead with this!
By , at
Fri Mar 20, 09:20:00 PM:
Escort81, my learned friend, you forgot, also, the impact of FICA and Medicare taxes (especially if the FICA ceiling is lifted) and, also, property taxes. That 50.1% could easily swell to 60-65%.
This could be a boost for realtors in Southeastern and Eastern Pennsylvania. My guess is that more NJ residents will try to move to Bucks and Northampton counties (as well as the Pocono region) to have lower taxes and a higher quality of life.
In all seriousness, as I pointed out in the post on the Michael Lewis article, Corzine's unwillingness to get the public employees' unions to take a haircut will cause the electorate to turn against him and the Democrats (unless, of course, there are more public employees in NJ than private-sector employees). Why should it be that those without pensions should have to pay so much to guarantee high pensions when, by doing so, if they're in the private sector, they might deplete their resources to the point where they won't have a decent retirement? This problem plagues the entire country, and not just New Jersey.
If these taxes go through, the Republicans will win the state house in 2009 and perhaps many seats in the state assembly and state senate. All of the issues go their way -- getting rid of corruption, shedding layers of state government, moving toward more transparency and fiscal accountability.
And, if they can prevail to some significant degree in this, the bluest of blue states, then the national Republicans should feel better about their chances around the country come 2010.
The Centrist
By Escort81, at
Fri Mar 20, 10:09:00 PM:
Yo Centrist - I picked up FICA and property taxes in the parenthetical of my last paragraph. You know I always try to distinguish between marginal and effective rates!
The bottom line is that living in NJ is pretty expensive, particularly when you are still the butt of jokes from urbane Manhattanites ("You live in Jersey -- what exit?", etc.). I also understand that it is one of the most expensive states for car insurance.
I still would not bet against Corzine. I guess if he is that far behind in the polls, the NJ Democratic Party can always get Frank Lautenberg to run in his place with a few weeks left in the race!
Anyway, Cenrist, you should be watching the NCAA hoops tourney or the Flyers beating the Sabres, now that the kids are in bed.
By Elise, at
Sat Mar 21, 09:42:00 AM:
Corzine continues his press forward to alienate everyone in the state not a member of a public employee union.
Yes but if the reports I've seen about 90% of new job creation in NJ coming in the public employee sector then holding onto just public employees - and their families - may give Corzine enough votes to be re-elected.
By , at
Sat Mar 21, 02:20:00 PM:
That's what I meant by "the political calculus". Yes, he may be betting on the winning horse electorally, and maybe win an election, but I think the result is bankruptcy for the state.
By Elise, at
Sat Mar 21, 09:38:00 PM:
I think the result is bankruptcy for the state.
Hmm. There's been a lot of chatter lately that when companies go bankrupt because their executives made bad, stupid, greedy decisions those executives should go belly-up, too. Could we invoke the same rule for NJ? If the State goes bankrupt because Corzine "bet on the winning horse politically", could we force Corzine has to kick in all his money to bail us out? Or at least 90% of everything over $250,000?
By , at
Sun Mar 22, 12:09:00 PM:
That would be fun. Of course, if my wife will agree, I hope to be a resident of Pennsylvania or points elsewhere by that point.
