Saturday, July 01, 2006

Billion Dollar Exodus

From the Wall Street Journal:

Jon Corzine Florio

Nearly every state in the nation is celebrating the new fiscal year that begins on Monday with record tax revenues. The big exception is New Jersey, which is headed instead for what could be a government shutdown.

The political showdown isn't between Republicans and Democrats, but is between Governor Jon Corzine and his fellow Democrats who control the state legislature. On Wednesday, Democrats cursed each other and, according to our eyewitness sources, came close to blows inside the capitol in Trenton. Mr. Corzine is now threatening a government shutdown if his own party doesn't bend to his proposal for a $1.5 billion tax increase.

Remarkably, all of this intra-party feuding isn't over whether to raise taxes, merely over how. Mr. Corzine wants to raise the state sales tax to 7% from an already high 6%. Many Democrats in the legislature believe this is political suicide, especially with the Governor low in the polls. But somehow they've convinced themselves that voters will happily swallow new levies on payroll, tobacco, computer services and car rentals instead. Meanwhile, the one promise that Democrats made to voters in last year's election campaign — lowering what are some of the highest property taxes in the country — remains conspicuously unfulfilled.

A new Quinnipiac poll finds that 47% of voters identify taxes as the biggest problem in the state — the highest number for any issue the polling firm has ever found in New Jersey. The Garden State has raised taxes nearly every year since 2000 and nearly twice as much per resident as the next highest tax state. Yet, no surprise, Trenton still has the biggest budget crisis outside of the states ruined by Hurricane Katrina. This taxing binge hasn't balanced the budget because state expenditures have ballooned by $8 billion, or about 45%, in six years. Mr. Corzine is nonetheless sticking to his story that state schools and services are underfunded.

The real New Jersey story is that a rising cost of living and taxes have spurred an exodus of businesses, high net worth individuals and working families. U.S. Census Bureau data indicate that, in 2004 alone, 60,000 more people left New Jersey than moved in. This outmigration led to a loss of $1 billion per year in the state's personal income, according to IRS statistics analyzed by the Manhattan Institute. Thus New Jersey finds itself in a spiral down: Taxes are raised, more taxpayers flee so the tax base shrinks, the politicians raise taxes again, and the cycle repeats itself.


Blogger Metroplexual said...

Didn't the NY times report yesterday that Corzine officially closed the state for business?

7/02/2006 09:26:00 AM  
Anonymous Anonymous said...

Dems never learn. Raising taxes does not help. BTW, those Bush tax cuts have increased the federal tax revenue.

7/02/2006 11:23:00 AM  
Anonymous Anonymous said...

Dems never learn. Raising taxes does not help

Yup, the real solution is to cut taxes and borrow and leave it to others to pay it off like Rethugs do.

BTW, those Bush tax cuts have increased the federal tax revenue.

That must be why we went from a surplus to a huge deficit and ran up a huge national debt.

And the only thing that has risen are corporate tax collections, but corporate taxes weren't cut at all.

The WSJ was pushing Whitman to cut taxes even if she had to borrow or raid pension funds for years. So she and McGreevey borrowed and now the chickens have come to roost.

7/02/2006 10:42:00 PM  
Anonymous Anonymous said...

Yup, the real solution is to cut taxes and borrow and leave it to others to pay it off like Rethugs do.

No, the real solution is to slash spending as you cut taxes. You can't have one without the other.

But in the end, it really doesn't matter what I or anyone else thinks, the results of the taxing and spending policies of NJ will be borne out by population and business stats. Are more folks coming into NJ than are leaving it for lower-cost states and localities? Are newer businesses starting or relocating to NJ in greater numbers than are closing up or relocating out of NJ for lower-cost and lower-anti-biz states?

Granted, NJ is lucky enough to be near an even bigger basket case (NY) and by default they will always receive some of the NY outflow, at least for awhile. However, one day all the jobs will have left high-taxland and migrated south and west.

I also find interesting the migration of immigrants out of NYC, and what will happen when large enough 2nd/3rd generation immigrant groups settle outside NYC and draw new immigration directly there rather than using NYC as a training-wheel. 'Cuz my feeling is, the 1st generation comes to NYC because it's adapted to handling lots of languages, cuisines, etc. Once their kids lose their parents' accents, they realize what a stupid tax and spend situation they're in and push out to lowtaxland, leaving NYC to handle the next ethnicity in the list. How many more ethnicities are out there that don't have representation in lowtaxland?

7/03/2006 05:00:00 PM  

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