By CHARLES WOWKANECH
Governor Christie likes to talk about “shared sacrifice.” The spending plan proposed by the Democratic Legislature gives him the opportunity to put his money where his mouth is.
The millionaire’s tax would cost an individual or family earning $1.5 million an extra $8,900 on their state income tax. Because state taxes are deductible from federal income taxes, the out-of-pocket cost to that Wall Street bond trader or corporate chief would be $5,785.
That $5,785 is less than the $6,058 that a police officer or firefighter or state worker making $65,000 will eventually pay out-of-pocket in increased pension and health premium contributions under the bill that Christie will sign into law tomorrow.
We are supposed to believe that these increased payments by state and local government workers are just their “fair share” contribution to their pension and health benefits and to putting New Jersey on a sound fiscal footing. These increases represent the equivalent of up to a 10 percent pay cut for these members of New Jersey’s shrinking middle class.
Yet we are supposed to believe Christie’s argument that we cannot increase net income taxes on New Jerseyans earning $1.5 million by $5,785 without driving them out-of-state!
Christie keeps saying that New Jerseyans are the most overtaxed people in the country. Let’s look at the facts.
As New Jersey Policy Perspective pointed out in a recent study, New Jerseyans ranked seventh in the country in state income taxes paid in 2009 – behind New York State, Connecticut, Massachusetts, Oregon, Michigan and California. Both New York and Connecticut are adding jobs faster than New Jersey, and it is California and Massachusetts that have been taking away our pharmaceutical jobs.
The Democratic bill would take New Jersey’s top income tax rate from 8.97 percent to 10.75 percent, but only on income over $1 million. Oregon’s 11 percent top tax rate kicks in at $250,000, Hawaii’s 11 percent rate at $200,000 and New York City’s combined state and local income tax is already 12.65 percent for those making over $500,000.
These are the same taxpayers who are benefiting from the Obama administration’s extension of the Bush tax cuts and who have made out like bandits on Wall Street.
In fact, it is the wealthy and the upper middle class who have reaped the rewards of virtually all of America’s economic growth over the past 30 years.
From World War II until 1980, the U.S. economy and personal income for the bottom four-fifths of American workers grew at the same rate of 160 percent after inflation. Manufacturing was booming, industrial unions were strong, and the wages, health benefits and pensions they won for their members propelled a consumer economy in which an average worker could afford to buy a home In the suburbs, a new car, go on vacation and send his or her children to college.
Since 1980, the U.S. economy has grown 140 percent after inflation, but real wages for the bottom four-fifths of American workers actually dropped by four percent. For most American workers, the answer to the question, “Are you better off today than you were 30 years ago?” is No!
The Great Recession supposedly ended in 2009, but we’re still in a recession where it counts – in job creation. New Jersey’s unemployment rate is still above nine percent, and that doesn’t include the hundreds of thousands of part-time workers who would like to be working fulltime or discouraged workers who have stopped looking for jobs that do not exist. The jobs that used to support a thriving middle class are being sent overseas by the corporate CEO’s trying to meet the expectations of the Wall Street financiers – the very people whose taxes Christie does not want to raise.
Hard-pressed workers who have lost jobs, hours or pay are frustrated and find it hard to pay their bills and their taxes. The one tax where New Jersey does rank highest in the country is the property tax, and the middle class and working class pay a higher percentage of their income to property taxes than the rich do.
The Democratic plan for the millionaire’s tax aims squarely at the biggest pocketbook issue for virtually all New Jersey taxpayers by dedicating almost $450 million to increased school aid for all school districts in the state – school districts whose budgets are supported mostly by local property taxes. The remaining $60 million from the millionaire’s tax would go to make both private sector and public sector pension income between $20,000 and $100,000 exempt from state income taxes. Christie should realize that it is retirees, not corporate executives at the peak of their earning power, who are most likely to leave New Jersey for states with lower income taxes.
If Christie really believes in “shared sacrifice,” he should accept the millionaire’s tax.
Charles Wowkanech is President of the New Jersey State AFL-CIO, which represents one million union members.