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Michael van der Galien

Jacob Laksin: Hope in Jersey

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Posted on April 12 2010 12:22 pm
Michael van der Galien was born in the Dutch city of Leeuwarden in 1984. For as long as he can remember, he has been obsessed with the United States. When he was 17 years old, he started blogging - of course about America. His articles have been published at Big Hollywood, Pajamas Media, Hot Air (the GreenRoom) and Right Across The Atlantic. He's also an editor for the Dutch conservative blog, De Dagelijkse Standaard.
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FrontPage Magazine editor Jacob Laksin wrote a fascinating article for City Journal about New Jersey’s Governor Chris Christie. Christie, Jacob writes, recently unveiled a budget that “has been alternately hailed and condemned for imposing spending cuts on the economically ailing state.” One item specifically, however, “has proved the biggest flashpoint: the so-called ‘millionaire’s tax’ surcharge on incomes of $400,000 or more.”

Former Governor Jon Corzine enacted this tax “on a one-year timeline to replenish the state’s chronically empty coffers and bolster depleted revenues. By allowing it to expire,” Jacob writes, “Christie has touched off a charged but vital debate about the kind of state New Jersey is – and the kind it should be.”

The death of the millionaire’s tax has provoked howls of outrage from New Jersey Democrats. State Senate president Stephen Sweeneycomplained that while Christie’s budget forces lean times on the state, “the only people that got a break are the higher-income people.” Sweeney has threatened that the Democrat-controlled state legislature would block the budget unless the tax is reinstated.

Critics seem to have a strong case: after all, why should “the rich” get a tax cut “when the governor is asking the state to tighten its collective belt?” As Jacob explains, however, “the fiscal reality is more complicated.”

For one thing, many of those hit by the millionaire tax aren’t really millionaires, but small businesses. Of the 63,480 income tax returns filed for incomes of $400,000 and more in 2008, over half had some small-business income, according to the New Jersey Division of Taxation. Moreover, New Jersey’s wealthy already face one of the heaviest tax burdens in the country. According to the latest figures, the top 1 percent of income earners pays 45 percent of state income taxes, the consequence of a highly progressive tax structure that will put New Jersey into a sixth-place tie this year with New York for the nation’s highest top marginal income-tax rate. With the sunset of the millionaire’s tax surcharge, New Jersey returns to the still-high rate established in the original “millionaire’s tax”: passed in 2004 by then governor Jim McGreevey, it considers individuals making $500,000 or more as millionaires, raising their tax rate to 8.97 percent. New Jersey also has the second-highest sales tax rate; the sixth-highest corporate tax rate; and the highest property taxes in the nation. Overall, as Christie points out, New Jersey collects more state and local taxes as a percentage of income than any other state. Affluent residents, of course, pay the largest share.

Read the whole thing at City Journal.

As an aside, it never ceases to amaze me that those who make less money than they’d like to consider it “fair” to steal from others who work twice as hard as they do and earn twice the amount of money as a result.

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