Tuesday, April 13, 2010

Hope in Jersey - In the state’s latest tax war, Governor Christie is standing firm.

NJ is the model that shows the legitimacy of the law of diminishing returns as a result of high taxation. As in NY, businesses and the wealthy are fleeing to more friendly business climates. It is about time the class warfare ceases and we all work together to make everyone wealthy. Build do not destroy.

New Jersey governor Chris Christie’s recently unveiled budget has been alternately hailed and condemned for imposing spending cuts on the economically ailing state, but one item that’s not actually in the proposed budget has proved the biggest flashpoint: the so-called “millionaire’s tax” surcharge on incomes of $400,000 or more. Former governor Jon Corzine enacted the tax on a one-year timeline to replenish the state’s chronically empty coffers and bolster depleted revenues. By allowing it to expire, Christie has touched off a charged but vital debate about the kind of state New Jersey is—and the kind it should be.

Christie’s critics would seem to have a strong case: Why should the rich get a tax break, especially when the governor is asking the state to tighten its collective belt? The fiscal reality is more complicated. For one thing, many of those hit by the millionaire tax aren’t really millionaires, but small businesses. Of the 63,480 income tax returns filed for incomes of $400,000 and more in 2008, over half had some small-business income, according to the New Jersey Division of Taxation. Moreover, New Jersey’s wealthy already face one of the heaviest tax burdens in the country. According to the latest figures, the top 1 percent of income earners pays 45 percent of state income taxes, the consequence of a highly progressive tax structure that will put New Jersey into a sixth-place tie this year with New York for the nation’s highest top marginal income-tax rate. With the sunset of the millionaire’s tax surcharge, New Jersey returns to the still-high rate established in the original “millionaire’s tax”: passed in 2004 by then governor Jim McGreevey, it considers individuals making $500,000 or more as millionaires, raising their tax rate to 8.97 percent. New Jersey also has the second-highest sales tax rate; the sixth-highest corporate tax rate; and the highest property taxes in the nation. Overall, as Christie points out, New Jersey collects more state and local taxes as a percentage of income than any other state. Affluent residents, of course, pay the largest share.

Read article here.

No comments:

Post a Comment