Last week the New Jersey State Legislature passed a $29 billion budget for fiscal 2010 which begins on July 1, 2009. Governor Corzine's budget raises taxes on virtually all New Jerseyans during a period of rising unemployment, foreclosures and bankruptcies. There is one word to describe this policy: dumb.
Corzine is also continuing the practice of using one shot revenues to balance the books, a policy he has harshly-and rightly–condemned throughout his term.
Some of the highlights of Governor Corzine's budget as reported in the press are as follows:
— Raises taxes for one year on family income over $1,000,000, moving that top tax rate to 10.75 percent.
— Eliminates, for one year, property tax deduction on next year's state income tax for all taxpayers who earn more than $250,000, and caps deductions at $5,000 for those who earn $250,000 or less.
— Raises tax rates on wine and liquor — but not beer — by 25 percent.
— Increases taxes on cigarettes to $2.70 per pack — up 12.5 cents from the current tax.
— Taxes lottery winnings over $10,000.
PROPERTY TAX REBATES
— Eliminates property tax rebates for non-senior citizen, non-disabled homeowners with incomes over $75,000.
— Provides two-thirds of last year's rebate amount to homeowners who earn between $50,000 and $75,000. Those rebates are to average about $700.
— Provides last year's rebate amount to all senior citizens, disabled people and to others who earn under $50,000. For senior citizens, the rebates would average about $1,200; for non-seniors with incomes under $50,000, they would average $900.
— Eliminates property tax rebates for renters
In addition, taxpayers who earn between $400,000 and $1,000,000 will have their marginal tax rate increase for one year. Wanna bet? Those temporary income tax hikes in the budget will become permanent if Corzine is reelected. Christie must eliminate them as soon as he is elected and "make the tough decisions" to cut state spending, bringing it in line with revenues ASAP after January 1, 2010.
Reducing or eliminating property tax rebates is in effect a tax hike. New Jerseyans will be paying more in taxes than they did last year. Nevertheless, rebates never should have been instituted in the first place; they are a shell game. And the income tax is the worst tax there is, because it punishes individuals and families as their incomes increase and is a gross violation of privacy.
But more fundamentally, Corzine is raising taxes during a depression. Yes, it is a depression-an unfortunate consequence of the cheap money policies of the Federal Reserve.
During a depression the economy eliminates the mistakes of the unsustainable boom. This means housing prices have to fall until supply and demand are brought back in balance. In addition, in other sectors of the economy that also got caught up in the boom, investments have to be liquidated in order to restore prosperity.
In the meantime, government spending will not "stimulate the economy"-the conventional view in DC, Trenton, on Main Street and on Wall Street. Government spending rose substantially and deficits ballooned under both Hoover and FDR, causing the depression to drag on until World War II "solved" the unemployment problem by increasing the ranks of the military by the millions to fight the Nazis and the Japanese.
The "cure" for what ails New Jersey and the nation is still the "old time remedies"-less taxes, less spending, less onerous regulations, and at the federal level stopping the printing presses.
Although the Depression of the 21st century was made in DC by the Federal Reserve, it will continue in both the country and New Jersey as long as Obamanomics and Corzinenomics continue in Washington and Trenton, respectively.