Monday, November 29, 2010

Misguided Math Challenges Think Tank's Assumptions About NJ Tax Burden

A liberal think tank, New Jersey Policy Perspectives, claims that New Jersey's tax burden is not as high as Gov. Chris Christie and New Jersey taxpayers think. They attempt to tackle the issue by claiming that Gov. Christie's annual taxable income of $540,792 was not sufficiently taxed, when Christie paid $33,619 in taxes.

The think tank's assumption is that the entire $540,792 should be hit with the 10.25% top tax rate, rather than the actual tax paid equivalent of 6.2%. By that reasoning, everyone is severely underpaying their actual taxes because the graduated tax system means that you pay income tax up to a set dollar value at each of the lowest rates.

However, that further ignores the reality that the entire Gross Income Tax in New Jersey is meant to be for property tax relief. It was not instituted to raise revenue separately for the state, but as a means to reduce property tax burdens around the state. New Jersey has been in the top three of top tax burdens overall for years, and is the highest property tax burdened state in the nation. This organization thinks that hitting up high income taxpayers will solve matters? Hardly. The overall tax burden means that taxpayers are fleeing the state to find lower tax burdens or that they themselves are fleeing from New York or Connecticut while staying in the New York metro area.

No, what will solve matters is reducing the pressures to continue raising property taxes endlessly and reducing the bureaucracies and unfunded mandates around the state - as well as properly funding pension obligations all while reducing and eliminating pensions going forward on new hires to reflect the fact that localities and taxpayers simply can no longer afford those obligations (and that the private sector no longer provides such compensation packages). Raising taxes further sends the wrong message at the wrong time.

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