Tuesday, September 29, 2009

New Jersey's Odd Man In Race For Governor

Everyone is keenly focused on Republican Chris Christie and the incumbent Democrat Jon Corzine, but there is a third candidate running for New Jersey Governor, Chris Daggett. He's pushing a property tax reduction scheme that involves cutting the state property tax while imposing the state's sales tax on professional services.
Independent candidate for governor Chris Daggett Tuesday proposed an overhaul of the state's tax system, cutting property taxes by up to $2,500 per homeowner and applying the 7 percent sales tax to professional and household services.
Candidates in the governor's race include, from left, Democratic Governor Corzine, Republican Chris Christie and independent Chris Daggett.

The state could generate $3.9 billion by taxing services provided to individuals -- such as legal and financial functions -- and then use the extra revenue to drop property taxes even more, by $4 billion, Daggett said at a Trenton press conference.

Daggett's plan, which he drew up over several months using independent studies and state budget numbers, would also reduce income taxes by $620 million and corporate taxes by $750 million.

"I think this makes New Jersey much more competitive," Daggett said. "I don't look at this as a sales tax increase as much as it is balancing the system and making it so we can make New Jersey more affordable again and attract business and industry."

Saying New Jersey has become an "unaffordable state," Daggett said $1.6 billion spent on property tax relief programs like rebates would be directly cut from homeowners' bills.
While that sounds intriguing on a superficial level, it really is no different than Jon Corzine's proposal that was enacted that brought a sales and use tax increase to cover property tax rebates. It's a bait and switch that does nothing to actually reduce state spending or the structural deficits that the state incurs because of spending more than it brings in.

Just as Corzine ended up cutting the property tax rebate all while keeping the sales tax hike, we'd just as likely see the expansion of the sales tax along with higher property taxes. Unless the spending is brought into control, shifting around where the tax revenue comes from results in nothing but a higher overall state tax burden.

That makes the state less competitive at a time when it is already seen as having one of the worst tax burdens in the nation and higher taxes are not what the state needs.

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