Much has been made about income taxes and income tax cuts - not just by Republicans, who base their entire economic plan on less taxes (which of course will usually vastly benefit their base by every conceivable metric), but also by Democrats lately as a way to provide stimulus or help in a time of need. And right here in New Jersey, Governor Christie's plan to cut income taxes by 10% across the board is very short on details about how the potential $1 billion+ deficit would be paid for.
As a tax professional, there are so many things wrong with this, not the least of which is Christie's statement about how everyone shared in the belt tightening over the past two years. If you remember, Christie gave the top earners a tax cut by letting the tax surcharge on the top income bracket expire - all while cutting the earned income tax credit, reduced property tax rebates, cut public transportation services, increased tolls and other fees that hit everyone BUT the top income earners hard.
But that really isn't the point I really want to make here, which is that these income tax cuts (1) will not materially help those who are below the higher and highest income brackets, (2) will vastly be skewed towards those in the higher and highest income brackets and weren't really sharing in any "belt tightening" in the first place, (3) don't add jobs, (4) are far worse of a stimulus to the economy than spending on stuff like rebuilding roads, fixing the infrastructure, or maybe a big mass transit tunnel between NJ and NY - all of which would add jobs and help the economy.
Vastly skewed towards "the 1%"
While a "10% across the board income tax cut" sounds nice, let's see how much this would help most people as opposed to the highest earners. Let's use estimated NJ tax rates of 4% for a family making $50,000 and, say, 9% for someone earning $1,000,000. The $50,000 family would have a tax cut from around $2,000 to $1,800 - a total annual tax cut of $200. In contrast, the $1,000,000 earner would reduce the tax liability from $90,000 to $81,000, a total annual tax cut of $9,000. Granted, this is an estimate but rounding issues aren't going to change this vastly unfair and unnecessary giveaway.
Reduced or "no income tax" states have very regressive tax systems
Governor Christie loves talking about how high NJ's taxes are compared to other states - not acknowledging the other states' local income tax rates or other taxes which are higher than NJ (sales tax, gasoline tax, etc.). So while it is great for LeBron James, it isn't good for most others to move to Florida or Texas due to the even more regressive tax system there.
Additionally, we never hear from the Governors of NJ, FL, TX or whatever other state likes to tout their lack of income tax just how regressive the tax structure is in states with no income tax. For example, it is pretty much a given that sales tax is about as regressive as a tax that exists (with maybe the exception of social security taxes). Not just as it relates to the percentage of income that lower and middle income classes pay on sales tax for items that are generally necessary (food, gas, many needed services and in many states outside of NJ, clothing) but also in terms of just how unavoidable sales tax is for common necessities.
Taking a look at this sortable chart based on states, tax type and quarter or even taking a look at the 3rd quarter 2011 alone for notorious "no income tax" states like FL and TX, we see that Florida has almost 61% of its total tax collection on sales tax alone. Florida also has a gasoline tax that is 3-4 times higher than New Jersey's - also very regressive. Texas has a whopping 63% of its total tax collection on sales tax alone, and a gasoline tax that is 50% higher than New Jersey's. By contrast, New Jersey's sales taxes accounted for just under 39% of total tax collection for the third quarter.
So that means the money has to come from somewhere, and if it isn't coming from "the 1%", it is coming from everywhere else. Lower levels of service. More fees. Less for education. Less for public safety - police and firefighters. Less for libraries, for hospitals and public services. Less for fixing the roads and bridges.
The real long term cost
This country's overall infrastructure is in dire shape, consistently receiving C-, D or F grades. Here in NJ, the last "report" in 2007 gave the state an overall C-, and little has been done to fix what was broken back then. The costs will only increase to fix things as time wears on. Think about how many jobs would be created for a massive infrastructure rebuilding plan. Think about the potential for a state to be the leader when it comes to something that will help the economy, the state residents and the overall fiscal health in so many ways.
And think about what happens when the millionaires get to keep more money, more services get cut, more people can't afford basic necessities and, say, the George Washington or Bayonne Bridge collapses.
On January 1, the minimum wage increased in eight states, modestly boosting the incomes of more than 1.4 million low-wage workers in Arizona, Colorado, Florida, Montana, Ohio, Oregon, Vermont and Washington. These states are part of a growing group that realizes the federal minimum wage of $7.25 is not enough to provide a decent living for working families - a group that still does not include New Jersey.
Sears/ K-Mart announced the closing of more than 100 stores, an indication more of their poor management than the economy, I think. The K-Mart and Sears I know in this area are threadbare, cheap and not ready to compete against Target, WalMart, Kohls and the rest.
That said, the PDF on the Sears site doesn't list any closings in New Jersey. It's just the first 79 closings, but a good sign for folks with jobs or other things tied to these stores.
"As Senator McConnell's statement today makes clear, the only thing standing between 160 million Americans and a tax increase is House Republicans' refusal to act." – Nancy Pelosi
Well, if you want to ask our “moderate” GOP delegation to the United States Congress why they are standing in the way of bipartisan agreements on taxes, unemployment and energy exploration legislation passed with 90 percent support in the Senate, here’s their addresses and phone numbers.
Frank Lobiondo (R-2) 5914 Main Street Mays Landing, New Jersey Phone: (609) 625-5008
Jon Runyan (R-3) 4167 Church Road Mount Laurel, New Jersey 08054 Phone: (856) 780-6436
Scott Garrett (R-5) 266 Harristown Rd, Suite 104 Glen Rock, New Jersey 07452 Phone: (201) 444-5454
Leonard Lance (R-7) 425 North Avenue East Westfield, New Jersey 07090 Phone: (908) 518-7733
Rodney Frelinghuysen (R-11) 30 Schuyler Place, 2nd Floor Morristown, New Jersey 07960 Phone: (973) 984-0711
Side thought. Why can members of Congress send us pretty, printed mail at taxpayers’ expense but their offices don’t have 800 numbers?
Like other groups that focus on the economy, we at NJPP closely follow the ups and downs in the labor markets and use the data to paint broader pictures of New Jersey's well-being. Now, thanks to a new report by national nonprofit USAction, we can also share the human face of the state's ongoing employment problem.
When you think of pollsters in New Jersey, one of the first names that comes to mind is Patrick Murray of Monmouth University. Yet, even an iconic figure like Murray has succumbed to the Tea Party propaganda. Check out this video snippet from his interview on NJ Today:
"Republican voters are against any tax hikes. Democratic voters are against any cost cuts."
The first part of Murray's statement is true, as we have seen with the so-called "super committee" and Governor Christie's justifying his double veto of the millionaire's tax based on the false assertion that it would drive wealthy people out of the state. But stating that Democratic voters are against cost cutting is just plain wrong and Murray should know better.
First, many Democrats are in favor of cutting the bloated defense and homeland security budgets, but have been stymied by the Republican minority. But even ignoring this obvious fact, Democrats have long been willing to compromise (some say too willing) on social programs to get the Republican votes they need to unjam the Senate filibusters that have been crippling our economy.
I can only assume that Murray has fallen victim to the biases about the economy that are pervasive within the mainstream corporate media.
Ever wonder how the rich keep getting richer and richer? Wonder no more. With power and precision, Robert Lenzner unmasks the method in "The Top 0.1% of the Nation Earn Half of All Capital Gains." That was the headline of Lenzner's recent StreetTalk column at forbes.com, and he cut immediately to the chase:
"Capital gains are the key ingredient of income disparity in the US-and the force behind the winner takes all mantra of our economic system. If you want [to] even out earning power in the U.S., you have to raise the 15% capital gains tax.
"Income and wealth disparities become even more absurd if we look at the top 0.1% of the nation's earners-rather than the more common 1%. The top 0.1%-about 315,000 individuals out of 315 million-are making about half of all capital gains on the sale of shares or property after 1 year; and these capital gains make up 60% of the income made by the Forbes 400."
Lets just get this out there First: I am a privileged Baby boomer. College was relatively cheap. I missed Vietnam. I got a State job that is fulfilling. A pension. Expensive, but still good healthcare. And I even get collective bargaining when its convenient for the politicians. Despite that, I AM grateful. And honestly, I feel guilty.
Why? Because I know that the generation out in the street right now don't have it as good as I did AND they are doing way more to effect change than I ever did at any Anti-nuke rally in the 80s.
I feel guilty because I had an easy job market in the mid 80s. They face "the new normal" - which might be 7-8% unemployment whenever we get back down to that level (and yes, Higher for minorities). To them, my defined benefit pension is like the phone land lines I own ... a dinosaur. In short, these young people face an economic disaster that only avoids revolution because of our tattered remnant of a social safety net. They dont deserve this and I feel guilty that I have done nothing to help them.
So yes, with my guilt in tow, I accompanied my Gen X friend today to deliver the soup he made to the Trenton Occupy. Not much of a help, but a start. I spoke to a 20 something there who said our government is irrelevant. He said the only worthwhile effort is to continue the protest and hope for change outside of government.
Is he right? After all, did government cause Bank of America to retract its new $5 transaction fee? The most arrogant, aggressive bank of all, BOA, backed down. Holy shit. Did Obama finally wake up and bring such change? The audacity of Hope? Nope. In the face of a OWS movement to move our bank accounts to smaller banks, BOA backed down.
But, I still doubt that OWS on its own will bring on the big reforms outside of the machinery of the existing political system. Yes that system is corrupted by money. Yes it works in the interests of its corporate masters. But the fact of the matter is... it collects the taxes and controls billions in resources. Its has an army, a police force, a court system and a bureaucracy that still can (if allowed to) enforce laws for the greater good.
In short, if government suddenly dissolved leaving OWS in its place... OWS would quickly have to rebuild something like what already exists to stave off a collapse of society. Yes they would build it with representatives who actually represent the people. And, OWS already has a government... its called the General Assembly.
So OWS is going to have to face it. Government isnt irrelevant. Their disgust with the corrupted system is right, but their conclusion that the system is useless is wrong. Its the people running the system that are the problem.
What I am suggesting is that OWS needs to contemplate a new phase. An occupation of the electoral system. Occupy the Voting Booth. Occupy the Parties. Take the apparatus of Government back for the people. Start with the party Committees, the local government, the school boards, the planning boards. Occupy THAT. they wont know what hit them.
Do you feel better off today than you did in 2000? Your job, your home, your retirement - do you feel more secure about all that? If you answered no, you are certainly not alone in the Garden State.
New Jersey's economy in the 2000s did very little to improve the lives of working families across the state, despite income growth during the early part of the decade. As a result, many people are worse off today than they were as we entered the new century.
That's the top-level message in the newest report by New Jersey Policy Perspective, which we released this morning.
More on New Jersey's 'lost decade' after the fold.
Today's NY Times has an op-ed by Robert Barro, of the Hoover Institution and Harvard University. It's not surprising that someone from the Hoover Institution says "Austerity not Stimulus." But as Franklin D. Roosevelt proved during the Depression, while both business and government may be able to hire in times like these, ONLY the government is willing to hire. Therefore we need stimulus. The question is "Which stimulus?"
Because of the NJ Clean Energy Program, we went form 9 kilowatts of solar power to about 400 megawatts in the last 11 years. Suppose we expanded the NJ Clean Energy Program to put a 40 KW solar array on every school in NJ, and the US?
What would it cost? What would it buy?
For starters, taxpayers pay the electric bills of schools. So if new solar is cheaper than new coal or new nuclear then it seems like a good idea.
And what happens in an emergency?
Here's the letter I sent the Times, Pres. Obama, Rush Holt, and Senators Menendez and Lautenberg.
I believe that creating jobs and helping the economy grow should be America's top priority. Unfortunately, the Republicans in Congress don't seem to agree. It's been 205 days since Republicans took control of the House and in that time Speaker Boehner has not posted any legislation to help put America back to work. In fact, the Republicans have devoted themselves to budget cuts that hurt working families and to protecting tax cuts for the wealthy, tax breaks for Big Oil and tax loopholes for companies that send jobs overseas.
I am working with my Democratic colleagues to advance an economic plan we call "Make It In America." This is a multi-part plan that help rebuild the manufacturing base in America with good jobs and companies that will contribute to long-term economic growth.
To highlight the Make It In America agenda I visited Seimens in Piscataway yesterday to showcase a manufacturing success story. Siemens has brought jobs back from China to a facility that combines manufacturing, Research and Development and marketing. Watch the video below to find out more about my trip to Seimens and the Make It In America agenda.
The letter below was written by the Teaneck Democratic Municipal Committee to President Obama. It was cc'd to our respective U. S. Senators and Congressman, as well as the BCDC and municipal chairs of Bergen County. We are strongly urging the President and his congressional supporters to actively address the issues of unemployment and foreclosures that Americans are confronting on a day to day basis not only in New Jersey, but national as well.
We are requesting that the President, along with Congress, take a Keynesian style approach to the aforementioned problems and come up with sound programs to address these issues.
It is time for the President and our democratic elected officials to stand up to the hardline republicans at both the state and federal levels and to fight for the democratic principles upon which our political party was founded and come up with bold initiatives to stimulate the economy regardless of the republicans refusal to solve these problems.
Take them to task loudly and clearly during the campaign so that Americans understand and recognize that it is the Republicans and not the Democrats who are holding America back.
It is time for our President and the Democratic Congressional members to take a stand!
**********************************
August 5, 2011
President Barack Obama
The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500
Dear Mr. President:
The most important factor in the 2012 election, more important than door-to-door organizing or clever campaign ads, will be unemployment and foreclosures. So we call upon the Obama administration and its congressional supporters to take a much more active approach to address these two areas.
Just resting on current policies and hoping for significant progress by November 2012 is insufficient. Current policies are moving the economy too slowly for 2012. But there is still over a year for a bolder approach to take effect--if implemented right away.
(A bolder approach is even more urgent to correct the setbacks imposed by the debt deal just negotiated with hardline Republicans.)
Bolder approaches mean a large Keynesian-style economic stimulus. The economic stimulus so far tried has been barely more than the continuation of normal amounts of spending. (Paul Krugman, "No We Can't? Or Won't," NYTimes, July 11, 2011) (*1)
The stimulus would include infrastructure renewal (roads, bridges, high speed rail, school buildings), support for starving state and local governments to retain and hire back severely needed teachers, librarians, police, and other public servants, keeping social security at least on a par with the cost of living, market-rate reimbursements for Medicare and Medicaid, and support for industrial research and development to make our economy more competitive worldwide.
And if unemployment still lags, a WPA-style direct hiring program should follow. (It's just hard to believe that it is better for the economy to have large numbers of people collecting unemployment insurance or to have given up on the job market, instead of building infrastructure, teaching, doing scientific research, or otherwise serving the economy.)
Objection: We don't have the money. We'd go into even a bigger deficit to do this.
Answer: This is the textbook Keynesian model. Yes, you do go into deficit to stimulate an economy out of a recession. Otherwise, the economy will never pick up enough strength to reduce even a pre-stimulus deficit. (*2) "A downturn is the one time when red ink is advisable."
Only after the economy regains its strength will there be enough resources to cut deficits--as well as to maintain government services (including health and education), provide employment and keep people in their homes.
And, if the voters see the President and the Democrats in Congress taking these initiatives, they will be given credit, instead of being seen as "me-too, can't do anything but wait, hope and spread suffering" semi-Republicans.
And if the Republicans prevent or damp down these initiatives, the campaign should loudly and persistently point to them as the reason for the lack of progress--and point out that the only way forward is to put more Democrats in Congress. Give Obama a Congress he can work with--to save the economy and the citizens it exists to serve. (*3)
Sincerely,
Laura I. Zucker, Chairperson
for the Teaneck Democratic Municipal Committee
cc: Obama for America (Official 2012 Campaign Committee)
Congressional Democratic Campaign Committee
Senate Democratic Campaign Committee
Senator Frank Lautenberg
Senator Robert Menendez
Congressman Steve Rothman
Bergen County Democratic Committee
Bergen County Municipal Committee Chairs
The Verizon strike enters its third day as more than 45,000 employees protest the company's demand for more than $1 billion in cutbacks to health care, retirement and other benefits.
Come to think of it, they like to argue and obfuscate in abstractions, as well. They campaign in abstractions and make abstract pledges until those abstractions turn into something tangible, like a subprime lending crisis or a downgrade from a particular private rating agency.
We spend so much time wading through abstractions that we cannot get to the meat of the issues that face us today. Enough of that.
What really happens in a bad economy? And what is the public's role during these tough times?
I'm not sure where to begin. I have been thinking about the repercussions of the Christie/Sweeney benefit and pension laws that were recently enacted. The increased health and pension benefit contributions, combined with cap law and the polarization of PERC will ensure for me, and tens of thousands more, a pay cut for the next 5 years. My disposable income in 2011 will be more than it will be in 2016. I know this makes many feel good. The greedy public worker finally gets what has been coming to him. It was a good call to arms by Christie to rally those who have suffered from the greed and selfishness from the Wall Street thieves. A common enemy in a depressed economy is a fabulous way to propagate an ideology to make others feel someone should suffer. So here we are.....tens of thousands will not see pay increases as the cost of living increases and the value of investments and real estate plummet.
To me the question is, what is the value of this law and union busting to the general economy? The issue of health insurance and its ever increasing costs is where the answers lie, the real ideological difference between left and right. Should the ability to see a doctor for a reasonable cost be a human right, or should it be a privilege for those fortunate enough to participate in a for profit health insurance scheme? The answer is obviously that Christie and Sweeney believe that perpetuating a privileged, for profit health care system is the America they would prefer to see. The cost of health insurance is where they decided to target, they could have chose a Massachusetts style reform, or expanding the SHBP by making public employers mandatorily participate and increasing the negotiating power of the state. The governor and legislature chose perpetuating the current broken, privileged, for profit system of delivering health care.
The economy is another ideological difference here. Any economist will tell you, and history will prove that government should spend during a recession, not curl into a ball and let things fall apart. Christie and Sweeney took this opportunity to pursue their ideological fantasies to screw public sector unions. Each public sector employee will now take a multi-thousand dollar pay cut, money that will not be spent on cars, home improvements, and flat screens. The lack of spending will reduce commission paid to sales people and sales tax paid to the state of NJ. Some may not be able to afford their homes any longer, adding more stock to available real estate, thus pushing real estate values lower and decreasing the value of real estate taxes. As day care, fuel, electricity, and food costs continue to rise this will further diminish purchasing power of the middle class. Increased cost of living combined with legislated pay cuts to the public sector will further decrease sales tax revenues.
The Christie/Sweeney pension and benefit reform may produce some short term relief for municipal budgets as the public sector is now required by law to take a pay cut. I question if taxes will really go down as government is subject to the same uncontrollable costs as every other citizen. Real, long lasting reform could have been accomplished by fixing real problems (like our broken health care system). The pension-benefit law will do more harm than good. It fulfills an ideological hatred for government and its employees. The damaging effects of this recession and its impact on those most vulnerable creates a real need for competent government. Shrinking government when those who need it most is insane. Perpetuating a broken system on the backs of the middle class is insane. Legislating a pay cut that will further damage a weak economy is insane. It may take decades to correct the Christie legacy, if we are lucky enough to make a correction.
Washington has been consumed with a protracted and distracting debate that tied the need to raise the Nation's debt limit to budget cuts. All reasonable people know that default was not an option. The failure of the country to pay its bills would have a catastrophic effect on the economy and on the lives of all Americans for years to come. This was a debate we shouldn't have been having. Every day and every hour that was spent in this battle was time that wasn't devoted to job creation or economic growth.
I voted against the deal that was made to end the crisis that paralyzed Congress and threatened the economy. A default had to be avoided, but this was not the best way to do it. First and foremost, the plan does nothing to create a single job and does nothing to aid the ailing economy. In fact, it could cause both immediate and long-term harm to the country's economic well being and to our ability to pursue economic opportunities.
"It is astounding that the Republicans claim to want to help the economy, but instead are cutting over 600,000 jobs, nearly 18,000 of which will be in New Jersey," said Senator Menendez. "It used to be that Republicans understood that transportation investment was necessary to spur economic growth and create jobs. Now, I guess they think if we give the rich enough tax breaks they will get off the golf course, get in a bulldozer, and start building roads."
Michele Bachmann says we can reduce unemployment by eliminating the minimum wage. Is that the kind of economic "recovery" we want—$4 and $5 and $6 per hour jobs? Van Jones is absolutely right. Too many of us are already sacrificing plenty. Too many of us are already paying for Wall Street’s recklessness with our personal austerities and anxieties. The Tea Party’s solution is to discredit our ideals and dismantle our government. But we can do better. We can build a movement to make OUR democracy work for OUR American Dreams. Let’s take the first step together by meeting on July 16th to get acquainted and share ideas.
Watching "National Small Business Week" and the U.S. Chamber of Commerce's "small business" summit unfold over the last two weeks, real small business owners like me can only watch and wonder.
We wonder if the bankers and insurers who drove the global economy off a cliff really believe they can steal our identities without anyone so much as commenting. We wonder whether due diligence exists in any large-scale institution, as our representatives at every level of government, in the mainstream media, and even in academia allow yet another corporate fraud to go unchallenged.
Well, this small business owner, with 9 employees and a 33 year old woodworking company, isn't about to let them get off scot free this time.
Make no mistake, the U.S. Chamber's "America's Small Business Summit" is a carnival of big business spin bought and paid for with millions of dollars corporations have taken from average Americans. Those usurious credit card interest rates, debit fees and penalties average Americans fork over every day, those outrageous health insurance premiums, or for that matter the tax breaks, abatements and subsidies big companies wring out of state and local governments - these all pay for the distortion and misrepresentation that was on full display down in our nation's capital. And all in the name of "small business."
The companies who underwrote this snake oil show are big corporate brands. Just take a look at the lists of sponsors. Some names that will jump out at you are Sam's Club (a subsidiary of Walmart), Travelers, FedEx, AFLAC, VISA, AT&T, Raytheon, Google, Microsoft... if it sounds more like "Multi-National Corporations Week," that's probably because it is.
But wait, there's more! Thanks to the Citizens United decision, corporations that once had to figure out clever ways to evade election laws and flood the halls of Congress and state legislatures with wheelbarrows of cash can now do so with impunity. This week in Washington, DC is no exception. It's all about rolling back new banking regulations, like swipe fee reforms. And by all means let's do away with the first health care law actually designed to help small businesses (instead of insurance companies). Corporate cash in politics, who's afraid of that big bad wolf?
Why, you might ask, are the traditional business lobbies more interested in fronting for big banks and big insurance than in supporting policies that will actually help small businesses? Well, you could start with the fact that the insurance industry secretly gave the U.S. Chamber $86 million in 2009 to fight against health care reform. Indeed, the bulk of the Chamber's budget that year came from a very short list of anonymous big money donors.
So where are the real small business owners? We're holding the fort at our businesses, hanging on, struggling to weather the storm of the economic devastation wrought by Wall Street and the other sponsors of the sideshow in DC. On Main Street, the "let Wall Street run free" rhetoric now spewing forth in the name of small business is an insult. Tight credit, laid off customers, shuttered local plants, nonexistent local banks (replaced by Citi, Wells Fargo and B of A) are the real threats to Main Street, not swipe fee regulation.
On Main Street, we have each other's backs, we care about the condition of the roads, our schools, and our health care system... because they are ours. If corporate America has its way, our kids will go to corporate schools, our roads will be leased to corporate operators and our health care system, well, that's already been bought and sold and bought and sold again in corporate deals that leave critical community institutions, from the family practitioner to the community hospital, in critical condition.
It is time we take our country back for sure, take it back from Walmart and Raytheon, Halliburton and Citibank. Let's tell the big corporate players we see through their con. You can't invoke small business if you're a giant corporation, you can't call yourselves American if you evade your tax obligations with offshore corporate headquarters, and you can't fool us any more. Main Street is onto you.
Governor Christie is using his taxpayer-funded political rallies to promote his reverse Robin Hood agenda.
According to the Star-Ledger's Megan DeMarco, Governor Christie is once again twisting the facts by taking credit for the slow but steady Obama economic recovery. The governor is claiming that the unexpected increase in state revenue, reported at yesterday's Assembly Budget Committee meeting, is due to his economic policies. This completely ignores the fact that the country as a whole is starting to see the impact of the economic stimulus.
Hopefully the mainstream media will not simply reprint the governor's lies and talking points, but will provide a critical analysis of why our state's economy is lagging the national recovery.
