As this recent Tax Foundation report illustrates, New Jersey has the highest property taxes, highest combined state and local taxes, fifth-highest corporate income tax and sixth-highest personal income tax rate in the nation.
An income tax is preferable to, and fairer than, a property tax. After all, property taxes are a tax on an asset, i.e., your wealth, which you already bought using dollars left over after you originally had your income taxed. Property taxes have the effect of double taxation. At least an income tax is a tax on current income, meaning it is theoretically accounting for (someone else's subjective, arbitrary judgment about) your current ability to pay tax.
Christie's proposal sounds great. He is the YouTube Governor, the reluctant candidate of whom commentators increasingly whisper that there are facts yet to be revealed which are deterring him from a 2012 White House bid. (Source: Bloomberg TV's post-Florida primary coverage this past Tuesday night.) But like almost everything he says and does, the rhetoric that plays well on YouTube (now, there's a high bar) fails to translate into anything great -- or good -- when implemented.
By proposing an income tax cut without accounting for corresponding budget cuts, Christie would shift the burden for services to the municipalities which...you guessed it...fund themselves with the property tax. Moreover, when the decisionmakers at the local level have to choose between funding salaries and benefits for friends and family on the town payroll, and actually providing services (salaries for actual workers plus capital expenses), guess which one they will choose?
(Incidentally, it is the local control and ability for elected officials to stuff town payrolls with friends, family and other supporters and thus buy their reelection votes, which I contend is the root of the "legal plunder" of New Jersey's homeowners and private sector to increasingly fund a bloated, inefficient and often unnecessary public sector.)
The bottom line is that while New Jersey Governor Christie touts his record of fiscal conservatism, New Jersey homeowners face the triple pincers of rising property taxes, declining services and -- in many suburban towns -- declining state funding for local schools (funded by the income tax) which (as explained by Star-Ledger columnist Paul Mulshine here) was designed to offset the property tax burden.
Is it any surprise, then, that New Jersey is ranked DEAD LAST in the nation in state business tax climate -- behind even 49th ranked New York?
PS: I am not in the habit of citing Star-Ledger editorials, but here I agree with them.
Eric Dixon is a New York corporate lawyer.