By Kevin Judge | July 3, 2018
Albert Einstein, who was so smart he was the original Einstein, said one definition of being crazy is doing the same thing over and over and expecting different results.
That makes New Jersey lawmakers some of the craziest in the nation. If raising taxes was the solution to a budget crisis then the state’s credit rating would not have been downgraded and the state would not have had another budget crisis this year. It is amazing how many new sources of revenue the state has implemented in my lifetime, but more was needed in the budget deal passed this week.
NJ was once a great state to relocate to because of no state income tax and low property taxes, which are now among the highest in the nation. In my lifetime the state budget has been buttressed with millions of dollars from the state lottery and casinos, without noticeable effect. This year, new taxes are being levied for a variety of things including vaping and uber riding.
The state Corporate Income tax began in 1958 at 1 3/4%. The new budget raises the top rate by 2 1/2 % to 11 1/2%. Senate President Stephen Sweeney says they can afford it because of the Federal Corporate tax cut this year, but that law doesn’t prevent businesses from leaving the state. To prevent that, the tax is to expire in 3 years. Maybe, but I wouldn’t hold my breath. When it comes to most things, and especially taxes, I have found that nothing is more permanent than a temporary fix.
Last year they raised the gas tax by 23 cents to fix the bankrupt Highway Trust Fund. Christie took credit for getting the money to fix state infrastructure, but didn’t mention the fix was only needed because the fund had been raided by the politicians to pay for state pensions.
In 1973, the state first implemented an income tax with a top rate of 3 1/2%. Governor Murphy wanted a millionaire’s tax, increase but settled for an increase from 8.95% to 10.75% on incomes above $5 million. This top rate is now second in the nation to the People’s Republic of California.
You would have thought the politicians might recall the reason for last year’s state crisis. One billionaire hedge fund manager decided to move to Florida where there is no state income tax. The rich supposedly do not pay “their fair share”, but the loss of one, repeat one well healed taxpayer blew a hole in the state budget that created a crisis.
Progressive taxation indeed! Does anyone want to bet that the pols will be clamoring for more revenue before Governor Murphy’s term is done?
Forrest Gump said it best, “Stupid is as stupid does”.