Trenton Mismanagement, Federal Obamanomics Sow Seeds of Fiscal Mayhem in New Jersey
Shameless as ever, Trenton Democrats are trying to lay blame for an $807 million budget gap at the feet of our embattled Governor Chris Christie.
And to be 100% fair, the Guv has made a few missteps, not the least of which was failing to pitch budgets with less spending on the front end and the less-than-aggressive use of his line-item veto power on the back end. Salt on the wound? Levying taxes on e-cigarettes and Internet transactions only serves to further muddy the waters and reinforce a dangerous misconception in voters’ minds:
That “revenue,” not spending, is the problem.
Wrong! No, no, no! Our deep fiscal problems embodied by yesterday’s grim announcement are spending based, and the goofy revenue “strategy” that’s dominated Trenton’s thinking for nearly the past two decades is exacerbating those problems. The only silver lining? We have new definitive proof to back up our counter-argument coming out of this latest fiscal crisis.
No myths. Only facts…
I’ll start from the beginning for the benefit of anyone who’s new to this saga.
For starters, know that the Governor’s critics have no moral authority to accuse anyone else of fiscal imprudence. Our spending addiction remains largely driven by decades of Democrat majorities (and a few Republicans) raiding pensions to fund other spending items in order to avoid making electorally-difficult choices. Nothing’s changed. The one way to bring our pension problems under control without massive public workforce reductions was the arbitration cap which Assembly Democrats just killed.
Oh, and on the subject of cuts, don’t let them fool you: there are other places to cut today. They’re simply not interested in doing it for the aforementioned reason. If you or I owned a business that was in the red, Save Jerseyans, we’d look at our profit/loss statement and cut costs before raising prices (which would discourage customers from buying) or borrowing money (which increases our liabilities and expenses on a monthly basis).
Trenton follows its own rules – spend and borrow until you have to raise taxes to balance the budget – and that’s why we’re in this current predicament.
Unfortunately for Trenton Democrats, unless they can figure out how to repeal the U.S. Constitution’s fundamental right to interstate travel, they can’t make anyone sit here and take it. Wealthier New Jerseyans continue to do just that by opting-out, taking their taxable cash and relocating to lower-tax states. A large fortune left the state between 2004 and 2008 alone before the sub prime mortgage-engendered “Great Recession” broke our collective camel’s back.
Democrats usually mock us when we point that empirical evidence proving, beyond a reasonable doubt, that so-called “millionaire taxes,” estate taxes, inheritance taxes, and progressive state income taxes have robbed New Jersey of significant revenues by convincing big income taxpayers to move elsewhere.
Yesterday’s ugly state revenue update afforded yet MORE proof for skeptics if they’re willing to consider it. “Typically, a significant portion of April income tax receipts come to the State in the form of physical checks mailed by extremely high-income taxpayers,” New Jersey’s Treasury department officials explained by way of a press release issued Tuesday. “These payments, which are not normally received until some days after the April 15 deadline for final settlements and extensions, are heavily affected by swings in capital gains and business income, which are volatile and difficult to predict prior to processing.”
The Washington Democrats!
They championed these built-in hikes that took effect for 2013 and which Republicans have been unable to reverse with President Obama in the White House and Harry Reid in charge of the Senate. N.J. revenues were rising, albeit slowly, prior to tax time and the arb cap collapse.
Again, please don’t delude yourselves into believing wealthier Americans don’t factor these developments into their calculations. They can’t escape federal taxes as easily, but they don’t have to subject themselves to living in a high tax state to compound the problem.
“New Jersey’s highly progressive income tax is notoriously volatile due to its extreme reliance on a relative handful of taxpayers,” the Treasury folks continued. “In recent years for example, just 400 taxpayers have accounted for almost 10 percent of New Jersey’s Gross Income Tax, the top 1 percent of state income taxpayers accounted for almost 40 percent, and the top 10 percent of all income taxpayers accounted for approximately 70 percent of total income tax revenues.”
Your eyes are fine… you read it correctly… 400 individual people account for approximately 10% of our state income tax revenue! Not 400 families or households. Single, solitary persons with free wills and an understandable desire to spend their own money on their own families and employees rather than Trenton’s bad accounting practices.
What happens when business leaders leave or close shop? Employees lose jobs, and even less people are paying taxes (i.e. “revenue”).
How could it possibly be any clearer? The U.S. economy is slowing, too, growing at a pace of only 0.1% in the first quarter of 2014. New Jersey’s unemployment “progress” is stagnating. Try as they might, no one can point to a single pre-2014 Christie policy that could’ve contributed to a giant, sudden revenue dip. We can’t say the same thing for the other side of the aisle. Policies pushed by our President and his party allies in state houses around the country are decimating the United States’ prosperity. In New Jersey, as you’re now aware (if you weren’t already), the self-induced sabotage has been ongoing for an entire generation. Barack Obama’s massive tax increases are providing the small push that will send us spiraling over the cliff.
Robin Hood budgeting is killing us, Save Jerseyans. Sherwood Forest is on fire! And pillaging a handful of successful people to fuel continued recklessness is not a strategy; it’s a suicide pact! And we’re running out of time to wake up, reverse course, and restore sanity in the halls of power before China’s got enough juice to buy us all out. Mathematics is bigger than all of us. The status quo is unworkable. It’s time to respect’em and do what’s necessary to right the ship.
Grim fiscal and economic news both in New Jersey (and nationally) MUST serve as a wake up call for anyone who still believes that robbing the rich to pay for government excess is a winning strategy. In reality, we’re only robbing ourselves of a future.