Tag: taxes

Fact (as David Sirota points out): The Bush tax cuts will expire at the end of the year if Congress does nothing.

Fact: The tax cuts cost the U.S. Treasury about $370 billion a year total, with the portion of the tax cuts for those making more than $250,000 a year costing $70 billion a year.

The impact of the cuts is nothing to sneeze at, but mostly for those at the upper ends of the income ladder. For nearly 80 percent of workers, the impact will be relatively small (only a couple of cents on the dollar), especially when compared with the brutal service cuts and tax hikes that will be needed down the road to pay for this unnecessary giveaway. For the rich, well, they make out like bandits.

And yet, the Democrats and the White House insist on finding things to give to the Republicans without getting anything in return. Ridiculous.

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New Jersey’s top earners are not exactly hurting.

While many are paying a lot in property taxes, the reality is that their income tax load is not nearly as great as that paid by their neighbors.

New Jersey Policy Perspective, the liberal research and advocacy group, issued a report today that “is countering the claims that the state has abnormally high levy rates” for high-earners.

While the more than 10 percent tax rate for top earners seems high, the graduated system creates a lower actual tax burden, the report found.

The report used Gov. Chris Christie’s most recent tax returns — which he made public in October — to demonstrate that high-earners pay far less than one might expect given the 10.25 percent top rate.

The report, released today, demonstrates how Christie and his wife Mary Pat paid a total 6.2 percent tax rate on their combined income because of the state’s graduated tax rate. While the top brackets levy a more than 10 percent tax, only the portion of income that falls into that margin is taxed at that rate.

“In New Jersey, opponents of progressive taxation like Governor Christie argue that rates are too high,” the report states. “But a full understanding of the state’s tax structure shows that New Jersey is actually quite competitive.”

This raises a simple question: Why not use the income tax to help offset the state’s reliance on property and sales taxes, which hit middle-income folks hardest? Gov. Christie, when he vetoes a surcharge on incomes over $1 million earlier this year, said it would make the state less competitive.

But, as NJPP points out, the Christies pay less in income taxes than they would in New York or Philadelphia.

In 2009, the Christies reported $540,792 in taxable income and paid $33,619 in taxes.
“To most, that sounds like a lot of money but to them that’s 6.2 percent of their New Jersey taxable income, considerably less than one would expect them to pay given their 10.25 percent tax bracket,” the report stated.

That is because only the $40,792 over $500,00 was taxed at a 10.25 percent rate. The rest of their income was taxed at a lower rate.

When comparing the overall rate, with surround states, NJPP found the Christies are paying less than some of their neighbors.

“The 6.2 percent effective income tax the Christie’s paid to New Jersey is less than they would have paid to New York State if Mrs. Christie’s job were there; less than they would have paid if she had worked in Philadelphia; and about what they would have paid if they had lived in Georgia,” the report found.

A bigger bite might not make Christie happy — or others in his tax bracket — but it seems unlikely that it would force high earners out of the state, making Christie’s lone argument against higher income taxes collapse of its own weight.

• Send me an e-mail.
• Read poetry at The Subterranean.
• Certainties and Uncertainties a chapbook by Hank Kalet, will be published in November by Finishing Line Press. It can be ordered here.
• Suburban Pastoral, a chapbook by Hank Kalet, available here.

It’s convention time for the state’s municipal officials, and they plan to focus their attention on Gov. Chris Christie’s so-called tax reform “tool kit.”

The convention — the League’s 95th — comes as Republican Gov. Chris Christie and Democratic leaders of the Legislature fight over how towns can meet the cap.

Christie has been pressuring the Legislature to pass his “tool kit” bills, the most important of which would allow towns to opt out of civil service rules and put a cap on arbitration awards. Senate President Stephen Sweeney (D-Gloucester) said he’ll get to that before the end of the year, but that the governor has not proposed legislation that would push towns to share more services.

Elizabeth Mayor J. Christian Bollwage said he and other mayors will use the convention to tell lawmakers and members of the Christie administration to stop fighting and get to work on property tax solutions. He said more drastic steps are needed than what’s included in the “tool kit.”

“The rhetoric, the chess playing has to stop and there needs to be some bills passed that will get us to meet this two percent cap,” he said. 

The problem, however, is the cap itself. The cap is nothing more than an arbitrary imposition, one that bears no relation to the reality of running local government. The cap, like so many of the other reform proposals on the table will only go so far and fail to address the real issues facing local government.

We need to stop making distinctions among different types of government spending and different taxes and start thinking about the role of government in the state in a more unified way. That will mean consolidation of some communities and school districts, elimination of fire districts (fire and first-aid spending should be a municipal or county-level responsibility) and other special taxing districts. This will allow streamlining — fewer police chiefs, fewer school superintendents, etc. — which should save money on the spending side.

Plus, we need to alter our thinking on taxes, begin to think of the tax pool as a larger single entity made up of smaller components — income, corporate, sales, property, gas, etc. We can then assess their fairness and make the most efficient use of them for collecting revenue and distributing funding according to need.

• Send me an e-mail.
• Read poetry at The Subterranean.
• Certainties and Uncertainties a chapbook by Hank Kalet, will be published in November by Finishing Line Press. It can be ordered here.
• Suburban Pastoral, a chapbook by Hank Kalet, available here.