Friday, June 10, 2011
The Democrat Years - A Record of Tax and Spend
The ten-year period between 1992 and 2002 the Republican-controlled Legislature reduced the tax burden of New Jersey residents no less than 62 times by including a 30% reduction in gross income tax rates and a rollback of the sales tax from seven to six percent.
New Jersey’s actual revenue for 1998, $17.2 billion, was greater than spending of $16.4 billion. The reverse was true for 2008, where spending was $33.3 billion, greater than the reoccurring state budget revenue of $32 billion.
Revenue from the state’s 2008 income tax increased 121 percent since 1998, 39 percent of total state revenue. Up considerably from1998 when the income tax paid for about one-third of state spending.
Sales tax revenue increased 84 percent, supporting about 28 percent of the state’s budget, as it did in1998. In the fall of 2006, the state’s sales tax was increased from 6% to 7% and expanded to cover additional goods and services. For 2008, sales tax revenue was projected to generate $1.9 billion more revenue than in 2006 and $4 billion more than 1998.
Taxes, fees and state revenue sources had increased by 58 percent or $4 billion, supporting 34 percent of the state’s budget, as compared to 40 percent in 1998.
Revenue tax had increased by 82 percent on the corporation and bank tax, and the “Realty Transfer Tax” increased 500 percent since 1998. The state received an increase of 82% from all other taxes and fees since 1998, generating a total of $4.3 billion more in revenue in 2008.
With all of this additional revenue, you would think New Jersey would be up to its eyeballs in profits. But through mismanagement the increased revenue has only added to our debt, as unaccounted spending was rampant.
To the Democrats, a tax reduction meant a loss of revenue. In 2004 former Governor McGreevey admitted that “tax cuts enacted during the [10 years of Republican control] lowered state revenues by $1.8 billion for this year alone.”
Governor Corzine and a Democrat-controlled Legislature were unwilling to reduce spending to meet recurring revenue so they did what Democrats in New Jersey always do – they raised taxes.
From 2002 through 2008 Democrats imposed 115 new taxes and tax increases. During this period there were five cigarette tax increases, four increases in realty transfer taxes, four health tax changes, and a new car rental tax with a subsequent increase.
The Democrat-controlled Legislature continued to increase revenue on income, sales and corporation business taxes.
In 2002 the McGreevey Administration and Democrat-controlled Legislature restructured the Corporation Business Tax in its mandate to raise an additional $1 billion from the business community.
In addition to the increased corporation business tax liability imposed in 2002, it now required a business to pay a surcharge equal to 4% of the amount of the corporation’s tax liability.
This legislation increased the corporation business tax minimum payment for taxpayers with New Jersey gross receipts of $100,000 or more. The new minimum tax ranges from $500 to $2,000.
The federal government granted business tax breaks in 2003 as part of the Jobs and Growth Tax Relief Reconciliation Act and again in 2009 as part of the American Recovery and Reinvestment Act. The Democrat-controlled Legislature decided that New Jersey businesses should not be given certain of the tax breaks granted by the federal government and disallowed the depreciation deduction and the manufacturer tax deduction, as well as the deferral of the taxable income generated from the repurchase of certain kinds of debt.
Income tax rates were increased in 2004 in order to provide one year of increased direct property tax relief. After that first year, the increased revenue was diverted for other purposes and was again increased January 2009 through the creation of two new marginal rates and the increase of a third.
In 2009 businesses were hit with another mandate which had the same impact as a tax increase. According to an article in the Wall Street Journal on June 20, 2007, the federal Department of Labor estimates that paid family leave programs cost employers an average of $1.76 per hour per full-time employee, or 6.8% of total compensation. A company with ten full-time employees saw an average increase in costs of approximately $36,608.
Also, the elimination of the property tax deduction in 2009 actually caused certain homeowners to pay income tax on their property taxes.
The sales tax was increased from 6% to 7% on July 1, 2006. Democrats chose to raise this tax only for the reasoning that it had not been increased during the previous five years, and raising taxes is an easier alternative for Democrats than cutting spending.
In October of 2006 the following became subject to the sales tax including dry cleaning of non-clothing items; landscaping; self-storage rental units; tanning and tattoo services; massages; information services; limousine services; flooring and carpet installation; parking, storing and garaging a motor vehicle; non-subscription magazines and periodicals; investigative and security services; and membership fees. Membership fees included charges by health clubs, gyms, golf clubs, and YMCAs.
One-half of the tax increase is constitutionally dedicated to property tax relief. During fiscal years 2007 and 2008 the other half of the tax increase was used to pay for legislative additions (pork) to the budget.
The new increases were estimated to yield the state on New Jersey $1.3 billion in new revenue, meaning that state residents paid out their pockets the same $1.3 billion to purchase necessary goods and services.
Democrats like to talk about the affordability and accessibility of health insurance in New Jersey. They appropriated millions of dollars to provide health insurance to low and moderate income state residents through the Family Care program, while at the same time imposing new taxes on health insurance providers. All this did was to pass the cost on to the policyholders, making insurance even less affordable. As part of the 2006 budget, two tax changes were approved that led to higher premiums.
The Democrats also could have passed the millionaires tax which they choose not to impose during this time, which will not make a dent in paying down the debt. Now during a time of lost jobs, high unemployment, and a market of foreclosed homes they want to raise the gasoline tax by 24 cents, at a time when New Jersey taxpayers can afford it the least.
With 115 tax increase, you would think the state would have brought in enough revenue to bring us financial stability by now. Years of waste and mismanagement are the reasons the state is in the dire financial mess it is today.
A struggling state economy combined with excessive taxes, unchecked regulations, and rampant spending have made New Jersey unaffordable to middle class families and our seniors who live on fixed incomes.
Democrat legislation also eliminated the ability of seniors with an income of $100,000 or more to exclude their pension and retirement income when paying New Jersey income tax. Democrats called seniors impacted by this legislation “high income taxpayers.”
Government doesn’t ‘need’ to; it ‘must’ operate more efficiently and spend less than it ever has before.
Just for the record our opponents voted for 114 of those increases.
Many of our politicians have forgotten why they were elected and are more concerned about holding office, and while successful at winning elections, they have failed New Jersey.
~ Joe Sinagra