Governor Corzine is proposing to hike taxes on the highest income earners in the state to help balance the 2010 budget. The Governor promises that the tax hike will be for one year only. But as the late economist Milton Friedman once quipped: "There is nothing as permanent as a temporary government program."
Rather than halt or at least reevaluate his collectivist/redistributionist crusade, Governor Corzine wants upper income families to pay for a greater proportion of state spending, even though they receive few government "services". He believes that government is the best way to help the most vulnerable in our society, neglecting the overwhelming evidence that the welfare state is unsustainable.
In addition, the unfunded costs of state retirees' health care and pensions clearly require a massive downsizing of state government in order to pay for state's contractual financial obligations without imposing massive tax increases.
New Jersey is more than broke; the political establishment is intellectually bankrupt. Continuing the collectivist ideology in Trenton will hasten the day of reckoning for all New Jerseyans. Thus, for New Jersey to prosper in the 21st century, it should operate a few things effectively, and the only way this can be achieved is for state government to become as lean as a marathon runner and reject once-and-for-all the ideology of collectivism
Meanwhile, Governor Corzine is hopelessly (?) trapped in his ideological paradigm and reveals a lack of imagination, because he and the Legislature's leaders are unwilling to end the plundering of taxpayers and initiate the nonprofitization of all social services. Moreover, not only is Corzine's vision of taxes and spending bad economics, it is morally indefensible.
Under Corzine's proposed tax hike plan, couples filing jointly whose incomes are in the $150,001 to $400,000 bracket would see their marginal tax rate climb from 5.525% to 6.37% bracket. For couples in a new income bracket, $400,001 to $500,000, the marginal tax rate would increase to 8%. Couples who earn between $500,001 and one million dollars would have their marginal tax rate jump from 8.97% to 10.25%, and a couple earning more than $1,000,001 would fall into a new confiscatory tax bracket, 10.75%.
In short, Corzine is taking a huge gamble, namely, that next year's tax revenue will jump markedly, and that higher marginal tax rates will not have adverse effects on the state's economy. He is wrong on both counts. Upper income New Jerseyans will arrange their affairs to reduce their taxes next year or they will accelerate their exodus from the state, while the state's business climate will be perceived even more inhospitable than it is now.
The New Jersey economy is still in the doldrums and raising taxes on anybody in the next fiscal year would be a repeat of the Hoover/FDR policies of the 1930s. Not only do we need lower tax rates on everyone, but policymakers in Trenton must begin the process of creating a culture of financial independence, and if subsidies are required for individuals and families to meet their basic needs they should be based on philanthropy not legal plunder, i.e., taxes. That means cutting the state budget by as much as $15 billion over the next five to seven years.
For example, I have outlined how state government should no longer fund K-12 education, the largest state expenditure, at http://www.jerseyconservative.com/. In my May 14th essay I argue education should be funded by local resources, either local taxes or fees and private and nonprofit funds. The state income tax would be abolished and the Abbott decision would have to be set aside.
This approach would be a "revolutionary" change in the way education is delivered in New Jersey. But the entrenched interests are so powerful that they will not consider any disruption of the status quo that is failing to educate tens of thousands of children.
As long as there is a state income tax, the social engineers who occupy the governor's mansion, legislate in the state house, and serve on the Supreme Court, will usethe people's incometo maintain or expand the collectivist/redistribution ideology. There is nothing "modertate" about the prevailing philosophy in Trenton.
Collectivism has failed all over the world. Yet New Jerseyans have been electing collectivists for governor and to the state legislature for decades. In short, the people of New Jersey are responsible for the mess the state is in today.
If the voters on Election Day in November want to continue the collectivist experiment in New Jersey, then they should by all means re-elect Jon Corzine, the most dedicated proponent in the state of the morally bankrupt principle, "From each according to his ability, to each according to his needs."