By Matt Rooney | The Save Jersey Blog
Hold on tight to your 401(k) plans…
You’ve doubtless heard how Dow Jones Industrial Average is down over 400 points as of this writing on Monday morning, continuing a dramatic slide that began back in June. And dramatic isn’t an overstatement by any means; “[t]he market drops have erased nearly $10 trillion from the global stock market since a peak on June 3,” Save Jerseyans. It’s the latest symptom of a predictable (and largely preventable) crisis, one for which the Obama Administration has no plan and doesn’t even try to pretend otherwise. But that’s a story for another post.
My focus? Since this is a New Jersey political website?
Blue states including our own could be in big, big trouble as we begin FY 2016 and then beyond.
You know why without me saying it: New Jersey and other states who rely on steep progressive taxation schemes to prop up unwieldy pension systems and social programs can’t afford to take a revenue hit at the moment. Since rich people pay most of the taxes, any by “most” I mean almost all of the taxes, $10 trillion (and counting) in lost earnings is not just a major income reduction for the wealthy investor class, many of whom have homes in Northern New Jersey, but also a huge kick in the chops for our state government’s coffers.
Current budget projections assume a modest 3.8% growth in total fiscal year revenue beginning July 1st. If today’s trends continue? Ain’t happening! The $40 billion will blow up. Municipalities like Newark will clamor for more aid. Migration to cheaper cost-of-living states will pick up speed. And New Jersey will once again be faced with its seemingly never-ending cultural of crisis-engendered dilemma: raise taxes or cut spending.