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New Jersey should get its own house in order

Phill Murphy -Sara Medina del Castillo

RE : New Jersey should get its own house in order

this letter was also published NorthJersey 7:03 a.m. ET Dec. 15, 2017

In regard to the federal tax reform debate, it’s amazing to read the many letters to the editor justifying the deduction of local taxes because New Jersey gets so little back from the U.S. government in comparison to other states. New Jersey’s disgraceful local taxes have nothing to do with the federal government or with the actions of other states and everything to do with the reckless fiscal mismanagement brought about by elected officials of both parties.

We have a pension system that will never be solvent unless it undergoes major reform. We have a public educational system supported by billions of dollars in spending — much of which is siphoned off before it ever gets to the classroom, and thus resulting in a failure of education in our major cities. We have more than 500 municipalities with a duplication of services that’s unique to New Jersey. And we have government workers making salaries and benefits together with retirement packages that are out of control and continue to escalate.

Rather than looking to the federal government for a handout so New Jersey can continue its profligate spending, we should be demanding sound solutions to our fiscal mess from our elected leaders.

Philip Affuso


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Federal Tax Reform Might Push New Jersey to Reform Tax System

Phill Murphy -Sara Medina del Castillo

November 20, 2017
Joseph Bishop-Henchman

Ridgewood NJ, New Jersey has long been the punching bag of state tax scholars. The state has the worst state business tax climate of the 50 states and the third highest overall state and local tax burden (behind only Connecticut and New York). Any New Jersey resident knows they pay the highest property taxes in the country, but other taxes are also high: income taxes (5th highest top rate), corporate taxes (6th highest in collections), sales taxes (16th highest in collections), cigarette taxes (10th highest), and gas taxes (8th highest) are all high, and New Jersey is currently one of two states with both an estate and an inheritance tax (the estate tax half is scheduled to be repealed in 2019, but we’ll see if the new Governor changes this). The state has more outbound net migration than any other. One bright spot: you can drink away your sorrows, with a mere 12-cent per gallon beer tax, lower than 40 other states.

The state and local tax deduction considerably reduces the sting of New Jersey’s tax bill, and it’s no coincidence that four of thirteen Republican nay votes on the House tax bill came from New Jersey representatives. New Jersey Senate President Steve Sweeney and newly elected Governor Phil Murphy, both Democrats, had pledged to make a higher income tax on millionaires a key early priority in 2018.

Now, however (Politico):

“We’re going to have to re-evaluate everything” if a federal bill repealing the state and local tax deduction becomes law, New Jersey Senate President Steve Sweeney said Wednesday in Atlantic City. Just days before, Sweeney had said he would make passage of a millionaires tax his chief priority in the new administration. “I’m just saying that what’s happening in Washington is concerning the hell out of me,” he added.

The changes to SALT are likely driving the reassessment. As ITEP, a group that promotes millionaires’ taxes, has explained, the state and local tax deduction “makes state income tax hikes a good deal,” since “income and property taxes are effectively less costly to state residents than are sales and excise taxes.” Take it away and New Jersey residents must pay full freight for their state and local governments. That may explain the seemingly contradictory rhetoric that millionaires taxes won’t affect the economy but eliminating the SALT deduction will be terrible.

If federal tax reform prompts New Jersey to overhaul its tax code, it’s long overdue. There are 244 townships, 265 boroughs, 49 cities, 15 towns, 3 villages, and 677 school districts. The three-member board running Tavistock, NJ, is a majority of the borough’s 5 inhabitants. A 1912 article recounted the history of New Jersey tax administration, which is a seemingly unending tale of bloated local government, corruption, and inequitable assessment. In the 1960s, railroad scholar George Hilton noted that the state’s practice of loading its property tax burden onto interstate commerce had ruined the viability of every railroad crossing the state. A 2003 state report dryly observed that state revenues had grown 1,700 percent since 1970, compared to population growth of 19 percent and inflation growth of 483 percent. The state adopted a sales tax in 1966 and an income tax in 1976, both with promises that they would be used to reduce crushing property tax burdens. Today New Jersey still has the nation’s highest property taxes, but with high income and sales taxes as well. It’s probably time for a rethink.