Friday, June 26, 2009

Budget and New Taxes Pass the Legislature

The Democratically controlled State Legislature raised taxes by $1.2 billion, $2.8 billion if you include reduced property tax rebates and reduced income tax deductions for property taxes, yesterday.

From the Asbury Park Press:

— Income tax rates will rise from 6.37 percent to 8 percent on household income between $400,000 and $500,000; from 8.97 percent to 10.25 percent for income between $500,000 and $1 million, as first proposed in March; and from 8.97 percent to 10.75 percent on income over $1 million.

— Cigarette taxes are going up 12.5 cents per pack to $2.70, beginning July 1.

— Taxes are going up by 3.5 cents on a typical 0.75 liter bottle of wine and 22 cents on a 0.75 liter bottle of liquor, beginning Aug. 1.

— Businesses will continue to pay a 4 percent surcharge on their corporate taxes that has been charged for three years but was supposed to expire.

— Taxes on group accident and health insurance premiums will go up for one year. Taxes on high-risk insurance policies, such as those for catastrophe-prone beachfront homes, will jump permanently from 3 percent to 5 percent.


Each of these taxes have the potential to reduce revenue.

It doesn't take all that much for high earners to move their incomes to other states.

Cigarettes are already about half the price in Delaware they are in New Jersey. There are several stores on Rt 13, just over the Delaware Memorial Bridge that thrive on selling cigarettes to NJ residents. The Democrats just made that trip for cost effective. Hopefully the increased tax will help more nicotine addicts kick the habit.

The wine and liquor tax will prompt consumers to drink less or drink less expensive products.

The business 4 percent surcharge has cost jobs and will cost more jobs. This tax is not on profits, it is on revenue. Even businesses that report losses have to pay a surcharge. Continuing this tax will push some small business over the edge to closure and their employees onto the unemployment insurance rolls.

Insurance is already too expensive. These taxes on insurance will push business and consumers to elect less coverage. As property values continue to decline, there will be less coverage need for property insurance.

These taxes will prove to be counter productive.

Several Republicans protested that this budget sets the next one up to have a deficit of $8 to $10 billion. I think it is worse than that. I don't think that tax revenues will come in to cover the expenses budgeted this year. We'll know in a few weeks.

I predict that revenues for the quarter that ends next week will come in much lower that Corzine is expecting, and revenues will be even worse in the quarter that ends in September. Corzine and the Assembly Democrats are going to have to interrupt their campaigns to go back to Trenton for emergency budget sessions.

Of course, the Democrats blame the crisis on Bush. Voters won't buy it.

4 comments:

stopthesocialists said...

Art - the Democrats are so delusional and have such contempt for the intelligence of the N.J. voter, they really think that by telling everyone this is the best they could do under the circumstances, they will not be affected by this in November. Their recipe for victory? Get the unions in line - the AFL-CIO, NJEA, CWA - all there. Dump tons of Corzine's money into the ridiculous claims we've been seeing as of late. Bring Obama into New Jersey like he was a commuter to Trenton. The good news as I see it - none of that will be enough to counter the anti-Corzine, anti-Democrat sentiment that has built up since the last election. With Obama's poll numbers dropping and a volatile world and sinking economy ready to explode at any minute and expose Obama for the inexperienced, incapable individual that he is, even his star power won't be enough to save Corzine.

Anonymous said...

just say no,to it ALL, "R" legislators, stand up for right,and you can be the new majority, starting in 2010 and 2011, that is, IF we have anything left of the county/state/country!

Anonymous said...

In case you need a drink after reading about these new taxes - the largest liquor store on the Eastern seaboard is off the first exit on I95 when you get to Delaware.

Anonymous said...

Guess the real estate business is in crisis......commentor @ 10:10 a.m. has so much time to spend with an opinion on everything and everywhere!!!