Skip to comments.Sinking into the Economic Swamp (McGreevey/NJ)
Posted on 07/13/2004 9:13:38 AM PDT by ICX
Sinking into the (Economic) Swamp New Jerseys Governor McGreevey is winning the race for worst.
By Paul J. Gessing
With Gray Davis long gone from the California governors seat, there has been some tough competition this year for the title of Americas Worst Governor. Governors Jennifer Granholm (Mich.), Frank Murkowski (Alaska), and Mark Warner (Va.) must be considered possibles for the dubious honor due to their successful attempts to raise taxes even as economic growth and state revenues have rebounded sharply nationwide. Rather than make modest spending cuts that would carry their states through to next year, when the revenue picture would be brighter, each passed significant tobacco tax hikes (with Warner also increasing the sales tax).
That said, the aforementioned governors have a lot of running to do if theyre going to catch this races front-runner, Gov. Jim McGreevey of New Jersey. None has a fiscal rap sheet as ugly as McGreevey, the man who can justifiably lay claim to having passed the most economically harmful state tax hikes this year.
While he has had an inauspicious term so far and is not very popular, even within his own party, McGreevey capped off his third year by raising taxes on cell phones, cigarettes (the states tax was already highest in nation), cosmetic surgery, and tires. But worst of all from an economic standpoint, McGreevey pushed a tax increase on the earnings of those who make more than $500,000 in a given year.
States have been less willing to raise their income taxes in recent years, in part due to extensive research by Dr. Richard Vedder and others showing how oppressive levies on earnings drive people and jobs out of state to a greater extent than other forms of taxation.
Yet McGreeveys rush to raise income taxes, boost spending by 13 percent in one year (the largest increase in state history), and test his states constitutional balanced-budget requirement, set him apart from the other tax-and-spenders. In fact, his effort to raise the states income tax this year is uniquely misguided no other state has enacted an increase in its income-tax rate so far in 2004.
Indeed, New Jersey presents a cautionary tale on the dangers of giving politicians access to new revenue streams especially an income tax. The Garden State began charging its income tax in 1976 at the seeming innocuous rate of 2 percent on the first $20,000 of family income and 2.5 percent on everything above $20,000. Today New Jersey has six tax brackets, with a top rate of 6.37 percent on income above $75,000 (twice that amount if married filing jointly).
McGreeveys plan boosts the state income-tax rate on incomes of $500,000 or more to 8.97 percent a 41 percent increase and is projected to raise $800 million from 28,000 upper-income taxpayers. This soak-the-rich mentality would give New Jersey the sixth-highest income-tax rate (by a couple fractions of a percent) in the nation, and only worsen the states lousy business climate (ranked 40th nationwide).
Not only are income taxes economically harmful, but by tying future budgets to the fate of high-earning taxpayers, New Jersey officials will be setting up everyone else for higher taxes down the road. Contrary to left-wing mythology, it is not only the wealthy who earn $500,000 annually; rather, it is farmers, small businesses, and homeowners that register an income spike before going back down to more mundane levels.
Unfortunately, revenues from high earners tend to jump when the economy is growing and fall precipitously when a recession hits. This will lead to higher taxes across the board, as politicians spend freely in good times and raise taxes when times are tough and revenues slump.
The $2 billion total tax hit from McGreeveys tax package is bound to anger New Jersey taxpayers in the short term, but the abject lack of fiscal discipline and the governors brazen attempt to sidestep his states constitution and take on $1.9 billion in debt may haunt the state for years to come. Republicans have filed a lawsuit to challenge the borrowing as a violation of the balanced-budget provision in the New Jersey constitution, which would seem to preclude the state from using debt proceeds to make up for a shortfall without voter approval.
Nonetheless, some creative judicial interpretation may be the only thing standing between big-spending politicians and their ability to foist unlimited debt upon current and future New Jersey taxpayers.
New Jersey is at an economic turning point. The state benefited from the post-9/11 exodus from New York City as billions of dollars and thousands of jobs flowed into New Jersey. But if Jim McGreevey continues current taxing and spending policies while creating a legal loophole to allow for massive budget deficits, he may very well transform the Garden State into the equivalent of an economic swampland.
(Excerpt) Read more at nationalreview.com ...
Didn't the NJSC find a "constitutional right" to put a democrat on the ballot *after* the deadline for putting names on the ballot had passed?
McGreevy is the worst. He is the most corrupt governor in my memory (and that is saying something). Like a typical liberal, he is given a near free pass from the press.
His campaign manager was arrested last week. The McGreevey campaign took a $40,000.00 bribe from a landowner so that he could sell his property back to the State for $5,000,000.00. The property would be worth no where near that amount on the open market.
A campaign finance law signed by McGreevy goes into effect AFTER the next election, but a huge tax increase is retroactive.
As a lifelong NJ resident and a manufacturer that operates in NJ, I have decided to move my manufacturing plant to SC next year.
I have decided to move my manufacturing plant to SC next year.
Welcome to South Carolina! I don't suppose you are at liberty to tell us any details yet?
But worst of all from an economic standpoint, McGreevey pushed a tax increase on the earnings of those who make more than $500,000 in a given year.
And in typical liberal double-speak, he labeled it his Millionaires Tax.
McGreevey sure has a gay old time spending other peoples money.
Anyone want to bet on just how much additional revenue will actually be generated by this tax hike?
The biggest impact of this tax is likely to be felt in the real estate market, as large numbers of high-end earners move out of the state's wealthiest suburbs.
By ensuring that New Jersey had two Democratic senators instead of a Senate delegation split between the two parties, the state's Democratic Party made it easier for the GOP Senate, House, and President to screw New Jersey in the Federal appropriations process. As a result, New Jersey remains one of the worst states in the country when it comes to Federal outlays received in comparison to Federal taxes paid -- this state receives something like $0.65 cents in Federal outlays for every dollar its taxpayers send to Washington.
Next up will be the next round of military base closings. I can virtually guarantee you that New Jersey will be lucky to keep even half its existing military bases.
But I hate to say it but after living under both, As bad as Mcgreevy is, He is not even close to being as bad as the worst governor in the country right now is: George Pataki
One of your favorite Governors is #1!
I'm pretty close - I go to Vanderbilt, so I enjoy southern comfort 9 months out of the year...I've been desperately trying to convince my parents to move, but I have a 10 year old brother and 2 elderly relatives here so that's unlikely.
This is what I hate about liberals. My grandfather was an alcoholic who deserted his wife, my dad and his two siblings when my dad was 8. He put himself through a small college in NJ (which is now a vocational school for immigrants) and 30 years later, he is a very successful businessman. My mother is the daughter of Polish immigrants who also happen to be Holocaust survivors, and her upbringing was no cakewalk. They worked their asses off to raise and provide for 3 kids and are the best parents I could ever hope for - and now McGreevey is looting my family and hundreds of others like mine for all their hard work. If nothing else, this has completely reaffirmed my conservative beliefs and deepened my animosity towards the Marxist entitlement programs of the American left.
New Jersey has received very low amount of Federal aid for decades. It really doesn't have that much to do with representation in Congress, although of course it doesn't help having 2 democrat Senators.
New Jersey gets less back than most states because it is one of the wealthiest states in the nation (#2 per capita income) and because it is relatively small and does not rely on Federal assistance like too many other states.
I don't expect to see much of a migration of wealth out of New Jersey because of Mcgreevy's silly millionaires tax. Most of my clients are very wealthy people and have large investments in business, real and personel property in New Jersey. They are going to eat this new tax (unless hopefully it is repealed) and continue doing what they do best here.....making lots of $$$$$. Unfortunately there isn't much else to do for many of them. It does not make fiscal sense to move many types of business from a rich area to a poor area just to avoid taxes.....yes you pay the government less but you can't make nearly the money you can make here in New Jersey nor do you get the same rate of appreciation on investments like real estate that you can get here. New Jersey is the goose that laid the golden egg and nobody knows that better than democrat pickpockets.
The question is: does this tax effect wealth or income?
I defined wealth as assets (real or intangible) and income as that shows up on W-2 or tax return.
Is this new levy a tax on intangible assets?
I agree that leaving New Jersey is difficult, if one is tied to a business or to real estate.
This new tax may not effect business owners directly and will effect people who own liquid assets only indirectly. As any accountant knows, business owners have a great deal of flexibility about the salaries and dividends they pay themselves.
The income from real estate because of the quirky laws that effect it are similarly sheltered to some extent.
Those who receive income from stocks and bonds are effected but many of these people are retired and can migrate to Florida for long enough to establish a "residence".
It seems to me (and I could be wrong) that the class that will be effected most are white collar professionals, the sort of people who worked at the World Trade Center.
These people generate high incomes but because they are generally young, they have little in the way of liquid or tangible assets.
The great irony is that these are the very taxpayers who vote Democratic in large numbers.
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