Tag Archive: income taxes

Reversing Progress: New Jersey Taxing Working-Poor Further Into Poverty

njppwhiten is communications director for our friends at New Jersey Policy Perspective. – promoted by Rosi

New Jersey is in unenviable company. It is one of just three states that has raised income taxes on working-poor families in recent years, making it harder for these families to work their way toward the middle class, according to the annual report on state income tax trends released this week by the Center on Budget and Policy Priorities.

Taxing the incomes of working-poor families makes no sense, and is contrary to decades of bipartisan efforts at both the federal and state levels to help such families work their way into the middle class, the Center’s report shows.

Christie’s Tax Cut: Selling Our Souls for $58

promoted by Rosi

Cross-posted at A New Jersey Farmer.

I’ve already commented on Governor Christie’s 10% tax cut proposal, which sounds like a wonderful idea, except that it’s not a wonderful idea. As Mark Magyar wrote in Sunday’s Newark Star-Ledger, the real problem in New Jersey is high property taxes, not the income tax rate. This comes on the heels of another report which said that New Jersey’s property tax rate rose at its lowest rate in 2011, an average of 2.4%.

To get an accurate picture of just how the governor’s proposal would affect the average taxpayer and homeowner, let’s take a look at both numbers, the income tax cut and the average increase in property taxes, and see what the real effect would be.

3 Tax Truths: Who’s Carrying Who?

In addition to the “debate”  on the federal level about the wealthiest Americans and corporations getting a free ride off We the People while just about everyone else is sacrificing what little they have left, there are three huge lies that seem to stick around way longer than they should about Americans and taxes.  I’ll put all three to bed right now with three simple facts:

  • Tax cuts for the rich are job killers (as evidenced by these links);
  • Many lower income families pay a lot of tax; and
  • The rich pay a lower percentage of their income in state taxes (at least here in NJ but also in many states) than everyone else.

It is these last two items that have really been in the forefront lately and a lot is based on the completely farcical selective focus on personal income tax.  The excuses and “proof” is laughable – that more money is paid by the top 5% (duh, they have 90% of the total income and wealth), that lower income Americans don’t pay federal or state income tax or whatever else.  But of course, that doesn’t take into account the following:

  • Property tax
  • Social Security tax
  • Medicare tax
  • Sales tax
  • Cigarette tax
  • Hotel tax
  • Non “tax” taxes such as tolls, ATM fees, parking or meter fees, etc.

Even taking the last few out of the mix, a recent 50 state study showed that in almost all states, the top 1% and 5% pay a lower share of their income in taxes, and the lowest 20% paid a substantially higher percentage of income in overall taxes – even when the income taxes are taken out of the equation.  

Here in NJ, just taking sales, property and income taxes, the lowest 20% pay almost 11% of their income in state tax, while the top 1% (with an average 2007 income in excess of $2,250,000) paid under 7.5% of their income in state taxes.  This is the lowest of any bracket (lowest 20%, next 20%, next 20%, next 20%, next 15%, next 4%, top 1%) and substantially lower than nearly all of the other brackets.

Couple this with the debunked lie that Governor Christie and his right wing ilk like to repeat about taxes and the little to no impact they have on people leaving a state, and you have those poor mistreated, misunderstood and unfairly picked on super rich crying about stuff that is a steaming pile of thousand dollar bills lining their pockets at the rest of our expense.

Raising Income Taxes doesn’t equal people leaving NJ

The NY Times has a story that says asking people that who more to pay more doesn’t mean they will run away to another state:

Pressured by enormous budget deficits, officials in Illinois, Hawaii, Wisconsin and New Jersey are considering new taxes on the rich. Lawmakers in Albany have discussed several proposals, including increases for those earning more than $250,000.

But even experts who oppose such taxes on other grounds – out of fear that they will retard economic growth and innovation, or encourage lawmakers to indulge in bouts of new spending – concede that there is not much evidence that raising taxes on the wealthy would drive out a significant number.

They cite New Jersey as an example:

New Jersey raised taxes on the wealthy in 2004, increasing by 2.6 percent the tax rate levied on those making more than $500,000 a year; and Gov. Jon S. Corzine this month proposed a new increase on high earners.

But a study by Professor Massey and two colleagues, published in September, estimated that the previous tax increase cost New Jersey only 50 to 350 existing “half-millionaire” households – a relatively small number against the total of 44,000 such households in the state.

While those departures cost the state about $38 million a year in revenue, the study estimates, the higher taxes levied on those who stayed have brought in an average of $895 million a year.

I’m sure this will be one more case where the facts won’t stand in the way of the NJ GOP arguments. With the Governor switching out the property tax deduction for a one year increase in the income tax rate for those making over $500,000, we’re sure to here the mantra shortly.

UPDATE BY CLAMMYC

As someone whose specialty is personal income tax and employment tax, this idea of people either not moving to NJ or leaving the state based on this increased income tax is, frankly, total crap.  The top combined NYC/NYS tax rate is still at least 2% higher than the proposed NJ top rate.  CT and PA have income tax rates much lower than NJs already.  Where are these people going to move to that they wouldn’t already have moved to?  And if anyone is going to NOT move to NJ because of a few hundred or even a few thousand dollars in tax, that is absolute nonsense.

Also, if people think that NYS is a destination instead, they are dreaming.  In Bergen County, I probably pay higher property taxes than most in the state, and friends of mine who are up to an hour away in NY pay 1.5 – 2 times as much in property tax.

I’d like to see statistical proof of any “flight” from NJ based on a few thousand dollars – even moreso in a down real estate market.