| Tuesday March 30, 2004 |
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New Jersey's Share of Federal Debt
From Tax Cuts and Related Borrowing Is Second in the US
New Jersey is second in the nation in the dubious statistic of how much federal tax cuts directed here will contribute to the exploding national debt, recently released figures show.
According to research by Washington-based Citizens for Tax Justice, the average cost per family of four in New Jersey over the next six years will be a net of $40,092 after the income from tax cuts is factored. Only Maryland is higher, at $40,133. The national average for a family of four is $37,826... [ Read More ]
New Jersey's Income Tax:
How Progressive? When it comes to providing services to residents-and paying for them-states are more important today than they were 25-30 years ago. The primary reasons for this come from above and below. On one hand, states have assumed a larger portion of many costs that previously were borne at the local level, especially with regard to primary and secondary public education. On the other hand, the federal government has devolved more responsibilities to states, like welfare. With the increased burdens for state government comes the task of figuring out how to raise the necessary money. And of course that involves taxation. So, governments wrestle with the issue of how to develop and maintain tax structures that meet residents' needs and do so in an equitable manner. In 41 states this includes a tax on personal income. On average, personal income taxes make up the second largest source of state revenues (behind sales taxes).
[ Read the Report ] [ Press Release ]
Tax Them and They Will Leave?
Not Likely, Data Shows
Figures released by New Jersey Policy Perspective refute the contention that changes in New Jersey's state income tax rate have an impact on whether people move to or from the state.
NJPP analyzed State-to-State Migration Data compiled and reported by the Internal Revenue Service for the 16 years for which it is available. The conclusion: no trends can be found to indicate increased movement from the state by any income group when income taxes go up, or that fewer people leave the state when the income tax goes down.
[ Read More ] [ Data Charts ]
UPSIDE DOWN & BACKWARDS
Taxes in New Jersey
This continues to be a state where the combined impact of sales, income and property taxes is that the lower someone's income, the higher percentage of that income they pay in those three taxes. In a word, the state/local tax structure in New Jersey is regressive.
Though the poorest people in New Jersey pay slightly less in taxes as a percentage of their income compared with seven years ago, in only six other states do poor people pay a higher share of their yearly income in taxes than in NJ. Who Pays? No one consciously designed it this way. New Jersey's tax structure has evolved over time. The local property tax-actually a real estate tax-is a holdover from colonial times. The state sales tax was established in 1965, ending a long period during which state government took in relatively little in revenue from citizens and provided relatively little in terms of services as compared to other states, especially northeastern neighbors. The state income tax came along in 1976, the response to a state Supreme Court ruling requiring a new system to pay for schools in view of the unconstitutionality of relying so heavy on local property taxes for that purpose. Even this brief history shows the interconnectedness of taxes in New Jersey, especially the link between the local property and state income tax: one created expressly to reduce the burden of the other in a way that aimed at taking more from those best able to pay and less from those least able.
HALF A LEG UP:
New Jersey Still Trails in Crucial Help for Working Poor
Rarely has a poverty-fighting tool been so highly regarded as the Earned Income Tax Credit. Liberals and conservatives embrace it; Democrats and Republicans vote for it. When it comes to "making work pay" the features of the EITC are seen as exemplary. Indeed, it is assistance available only to working people.
When New Jersey enacted its own version of the EITC in 2000 it joined other states in taking a major step to help people who are working hard but having trouble getting by. At the time, however, there were aspects of the EITC that made New Jersey stand out from other states in a negative way. To put it bluntly, New Jersey's EITC was decidedly less generous than those elsewhere. Two years have passed. Information now exists as to how many New Jerseyans have claimed state EITC benefits. During that period some changes have occurred in the federal EITC, more states have established EITCs, some states have expanded benefits and New Jersey's budget crisis has contributed to expansion of some taxes that fall disproportionately hard on lower income people. This report examines where New Jersey now stands, and offers recommendations for improving the EITC. Unquestionably, the more than $100 million New Jersey has given out in tax credits over two years has been very helpful to the recipients. But the state EITC could become a better, more effective path out of poverty for the men, women and children of the state.
Fiscal Stress:
By Henry A. Coleman
It's Not Just a Big City Problem
From the Introduction by Jon Shure, NJPP President:
Stereotypes, whether they deal with people, places or problems, are dangerous and misleading. They divert attention away from real needs and real solutions. So it is with the issue covered by this report, written by Henry A. Coleman. Too often when we think of places where quality of life is threatened by the spiral of rising taxes and declining services, cities come to mind -- aging, rundown, unappealing cities. It is important to know that many other places in New Jersey - including some that on the surface appear to be thriving-face the same conditions that have been so brutal for the cities. By seeing this bigger picture we can understand more clearly that no one in New Jersey is immune from the situation outlined in this report. This is "our" problem, not "their" problem .The sooner we see this, the sooner we can start to debate and develop solutions for rising New Jersey of the tricking time bomb of fiscal stress. [ Read the report ]
The State Of Working New Jersey
Despite being one of the largest economic expansions in state history,
the boom of the 1990s did not bring real income and wage gains for the
majority of New Jersey workers and households. Only those at the top
of the labor market emerged from the decade in better shape.
The State of Working New Jersey was written by Leslie McCall, a professor at Rutgers University. She offers a comprehensive protrait of changes in earnings and income during the 1990s. The bottom line: the tightening of the labor market that helps to increase wages at the bottom and middle came too late and did not last long enough to have a major impact on wage growth.
[ download the report ]
[ press release ]
NJPP President Jon Shure spoke at a forum on property taxes held by the Rider Institute for New Jersey Politics. You may already know this, but we live in a strange state. How strange? Let me give you some examples. This is one of only two states in the US where you can't pump your own gas. It's one of a handful of states where there is no lieutenant governor and every cabinet member is appointed by the governor instead of elected. It's the only state where you have to pay for a tag to go to a public beach. And if you want to go back into our history it's the only northern state that Abraham Lincoln didn't win either time he ran for President. You might say we have a lot to answer for. [ Read the rest of Jon Shure's remarks ]
Facts About The Gas Tax:
To learn more about this issue and what can be done to increase revenue, make more money available for mass transit and combat sprawl and traffic congestion, read Perspective on the Gas Tax and Car Registration Fees by NJPP Senior Policy Analyst Mary E. Forsberg.
[ read the report ]
Take the Money and Run:
How Fiscal Policy from the 90's to Now Threatens New Jersey's Future A new NJPP report details how New Jersey over the past decade departed from traditional practices, squandered prosperity and set the stage for serious difficulties in the years to come. This report is written by Judith C. Cambria, who dug deep into 30 years of fiscal data and used the best available information to project state spending and borrowing into the near future. She concluded that "policies largely designed to accommodate tax cuts undermined the state's long-term financial strength and state government's ability to pay for basic services." Here is an excerpt from the Introduction to Take the Money and Run: "In this decade, 2001 offers New Jersey voters their greatest chance to affect state policy. Besides electing a new Governor we will fill all 120 seats in the state Senate and Assembly with representatives from newly drawn legislative districts. The men and women chosen for those positions will take action on a host of issues and determine how billions of dollars of tax revenue will be spent. But decisions made during the rest of this decade - and beyond - will not be entirely their own. They will be strongly influenced - and in many cases limited - by the course taken over the past 10 years."
[ download the report ]
Mission Statement: Why We're Here
New Jersey is at a crossroads. It's not clear that the gains of the past will be protected or that the building process, far from complete, will continue. Today the anti-government message too often emanates from government itself. Political debate occurs within narrow bounds.
NJPP was founded in 1997 to respond to this situation. It's a nonpartisan, non-profit
organization with the mission of ensuring that a progressive voice is brought back into
the debate in New Jersey. A progressive voice is one that believes:
But there's more to NJPP's philosophy: we recognize the need for ongoing strategic communication efforts. To win debates you must start at the beginning to actively shape the terms of those debates. NJPP nurtures and advances ideas. We analyze current policy issues in a timely fashion. We work with grassroots organizations to build alliances for change. We seek higher public awareness of the real choices New Jersey faces, honest debate over solutions, and a climate where progressive principles can prevail.
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