Category Archives: Debrorah Howlett

>AS a Matter Of Fact…Busting the myth: The real numbers show N.J. is not the most overtaxed state in the nation

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By Mary E. Forsberg and Deborah Howlett
June 26th, 2011

Perhaps you’ve heard a politician or two, in an accusatory tone, declare New Jersey has the highest taxes in the nation. It’s become a rallying cry for the current administration. It is repeated as an indisputable fact by the media. But mostly it just sounds right to people, perhaps because it so neatly fits the cynical narrative of government waste, fraud and abuse.
The thing is, it’s not true.

Consider this from a recent press release by the Connecticut House Republican Party:
“Connecticut residents already pay the highest taxes in America.”
Or this from the Buffalo News editorial page: “New York is the most overtaxed state in the nation.”
Nope. According to the Orange County chapter of the Lambda Alpha economics society, “California is the most overtaxed state in the nation,”
And from a conservative pundit in Chicago: “I live in Illinois … the most overtaxed state in the union.”
But wait. There’s another. The vice chair of the Maine Republican Party has said, “Maine is currently the most overtaxed state in America.”
They can’t all be right.
For the record, New Jersey ranks eighth among all states when state and local tax revenues are compared as a percentage of taxpayer’s personal income, according to an analysis using data from the U.S. Census and the U.S. Department of Commerce, Bureau of Economic Analysis. It’s the cleanest comparison of the tax “burden” in all 50 states. New Jersey’s ranking drops considerably once you get past property taxes and look only at state tax collections.
Simply comparing total revenue collected from taxes in each state would produce a wholly inaccurate comparison because poorer, less-populated states would always appear to tax less. Measuring as a percentage of personal income, or on a per capita basis, provides necessary
context and a more accurate comparison among states.
Consider the big three state revenue sources in New Jersey — income, corporate and sales taxes — and then size up property taxes.

Income tax


On a per capita basis, New Jersey ranks seventh among states for income tax revenues, according to U.S. Census data. As a percentage of personal income, New Jersey ranks 19th among states.
It’s important to understand New Jersey is consistently at the top of lists that rank states in terms of median income and millionaires (those with at least $1 million in investable or liquid assets) as a percentage of households.
With all that wealth, the state also has a progressive income tax that collects significant amounts of its revenue from the wealthiest in the state and virtually none from the poorest, such as married couples whose incomes are less than $20,000 ($10,000 for a single person).
The progressive aspect of New Jersey’s income tax has evolved since the state’s first 2 percent flat tax was enacted in 1976. Public opinion polls show a vast majority approve of raising rates levied on income that exceeds $1 million a year.
Other states also have local income taxes. Philadelphia, for example, levies a 3.928 percent wage tax on residents and a 3.4985 percent wage tax on nonresidents on top of the state’s 3.07 percent flat income tax. Cities in New Jersey are barred from imposing income taxes on workers.
Corporate Tax

Corporate taxes in New Jersey rank ninth as a percentage of personal income and sixth when measured per capita.
New Jersey took in a little more than $2 billion in fiscal year 2010 from corporations, or 7.5 percent of all revenue collected by the state. However, 93 percent of the 252,000 corporations subject to New Jersey’s corporate business tax paid the state less than $2,000 each. Corporate revenues for the year surpassed $24.6 billion.
Sales Tax

Comparing revenue from the sales tax puts New Jersey 19th on a per capita basis and 36th when measured as a percent of personal income.
The state sales tax is often cited as one of the highest in the nation because of its 7 percent rate. However, it is applied more narrowly than sales taxes are in many other states.
Food, clothing and gas are exempt, for example. Depending how one looks at it, that is a loss to the state or a savings to taxpayers of about $2.6 billion.
Nor does New Jersey allow cities or counties to collect local sales taxes, which many other states allow.
Montgomery, Ala., levies a 10 percent sales tax (4 percent state; 6 percent local) on everything sold, including food.
In Georgia, a 12 percent combined state and local sales tax is the norm in some areas of the state.
Property Taxes

What’s abundantly clear, however you slice the data, is that New Jersey ranks among the top one or two states in the nation when it comes to property taxes, which are the only real source of revenue for local government in the Garden State. Last year, property taxes produced $25 billion in revenues, exceeding revenue from the state’s three major taxes.
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In total, as a percentage of personal income, taxes in New Jersey rank about eighth among all the states. Considering it ranks near the top for median income and wealth, that designation hardly seems out of line.
But those are not the numbers pushed by anti-tax zealots. Groups such as the conservative Tax Foundation have cited New Jersey as having the highest tax burden in the nation, using a convoluted formula that doesn’t quite parse the intricacies of local tax laws.
For example, the Tax Foundation charges back to New Jersey the $2.6 billion in income taxes paid to New York by New Jersey residents who work in New York and must abide by New York tax laws, over which New Jersey has no control.
By the way, that $2.6 billion is not just a blip in the data. It is more than New Jersey collects from its corporation business tax, the state’s third-largest revenue source, and it is one of the largest income transfers from one state to another in the country.
All of this just points to the need to be careful when citing state rankings.
Some, such as the Tax Foundation’s, only obscure real facts because they allow politicians to cherry-pick data and use them to justify their political philosophy.
So the next time you hear someone say New Jersey is the most overtaxed state in the nation, look past the rhetoric and consider the real numbers behind the statement.

Check out the tax data tables here.

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Filed under corporate taxes, Debrorah Howlett, income taxes, New Jersey, New Jersey Policy Perspective, property taxes, sales tax, tax burden

>NJPP – Special budget update: Take two

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You might have seen media coverage of the Rev. Jesse Jackson in New Jersey the other day. He talked to reporters in the hot sun on the steps of Citigroup building in Jersey City about the need to invest in schools, cities and people – not throw tax breaks at financial institutions which are just hoarding capital in this lousy economy.

I was struck standing there with him not just by how important it was to have someone of Jackson’s stature here in New Jersey delivering a message about help for working people, but how great it was that he was delivering the Better Choices budget coalition message.

You see, sometimes, the work we do at NJPP that matters most is behind the scenes – work we get the opportunity to do because years of credible research and strategic messaging have put us in a position to influence events.

This week is a great example.

Before Reverend Jackson went before the media I briefed him at the request of our coalition partners on a paper analyst Sarah Stecker and I wrote that identified $1 billion in tax subsidies that the state has awarded to corporations the past 16 months. That work is at the core of the Better Choices push for investment in services that lift up all New Jerseyans rather than providing tax breaks to corporations and the wealthy.

Jackson is an icon of the civil rights era and one of the strongest voices fighting poverty in America. He was in New Jersey for a series of labor rallies, as well as news conference on behalf of Better Choices to talk about the surge in corporate taxpayer subsidies here in New Jersey. At our table in the Westin Newport, I outlined our research that showed 70 major corporations have been awarded a total of more than $1 billion in taxpayer subsidies on the promise to create jobs.

Citigroup is a prime example. The bank received $87 million in subsidies since 2004. The expectation was that the financial giant would justify the subsidy by hiring 3,750 people. (Citi is still 1,000 jobs shy, by its own count). The latest Citigroup subsidy was approved in March – $12.3 million to bring 400 jobs from New York State to Jersey City. Three weeks after it was awarded the subsidy, Citigroup announced it was laying off nearly 300 workers at one of its New Jersey sites. Not a very good deal for New Jersey taxpayers, as it turned out.

Jackson, over a bowl of Raisin Bran, grinned and turned the analysis into a newsworthy sound-bite: “They got the money, we didn’t get the jobs. … We should be investing in people, not corporations.”

I was delighted to play my small role in Jackson’s visit to New Jersey. And even if I can’t resist the temptation to do a little name-dropping, more importantly I hope sharing this anecdote helps illustrate to you the important work we do here at New Jersey Policy Perspective.

More to come…

Deborah Howlett, President

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Filed under Citigroup, civil-rights movement, corporate tax breaks, Debrorah Howlett, New Jersey, New Jersey Policy Perspective, NJ State Budget, Rev. Jesse Jackson, update

>A special state budget update from NJPP President Deborah Howlett

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In his budget address three months ago, Governor Christie outlined his view of the “new normal” in New Jersey. It went something like this:

  • Rich people get tax breaks.
  • The middle class pays more.
  • We all make do with less.

Most states, instead of relying solely on cuts to services – cuts that threaten jobs and economic recovery and hurt struggling families – have adopted a balanced approach that includes revenues. But the plan laid out by the governor was cuts-only. It would close state facilities for the profoundly disabled; continue last year’s devastating cuts to schools; and require deep reductions in health insurance coverage for people with no place else to turn.

Over the next month or so, lawmakers and the governor will work in Trenton toward agreement on a state spending plan for the coming fiscal year.

NJPP will be in the thick of things.

As we have for 14 years, NJPP is fighting for the return of fair and progressive fiscal policies that until recently provided opportunities for all New Jerseyans and prosperity that was broadly shared across the Garden State. In a series of emails over the next couple of weeks I’ll give you more details, but here are a few highlights of the work that NJPP is doing to make a difference.

  • Senior Analyst Ray Castro is a leading voice in the independent and critical analysis of how cuts to NJ Family Care, the state Earned Income Tax Credit, and Medicaid will make it harder for poor and working families to get by.
  • A study by NJPP and the national group Demos showed that a bill to deregulate telecommunications in New Jersey would cost consumers, especially the poor and the elderly. Using the findings in the report, NJ Citizen Action and AARP went to work on lawmakers and in a grassroots effort that included more than 10,000 phone calls to legislative offices they succeeded in getting the measure tabled.
  • NJPP’s report on the proliferation of corporate subsidies is the foundation for ongoing efforts by the Better Choices coalition, of which we’re a member, to restore badly needed revenue. Made up of more than 70 nonprofits — including human services, education, religious, and labor groups – Better Choices is a vocal advocate for a proposal developed by NJPP to raise taxes on the wealthiest among us, those with income (not net worth, but income) over $1 million a year.

We’re proud to be a leading voice for common sense in New Jersey, and to strongly and clearly advocate for those who have the smallest voices in the public arena – the middle class, working families, the disabled and the most vulnerable in our society.

That work was spotlighted in a story published recently by the Asbury Park Press, which caught the attention of one of its hometown readers, rock icon Bruce Springsteen. Speaking of NJPP and our partners, Springsteen wrote in a letter to the editor, “These are voices that in our current climate are having a hard time being heard, not just in New Jersey, but nationally.”

Like you, and The Boss, we refuse to accept the idea that there’s a “new normal.”

Not here in New Jersey.

Not this year.

More to come…

Deborah Howlett, President

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Update: I want to clarify a point made in our earlier email “Special State Budget Update,” which may have left the impression that as a policy matter NJPP is opposed to the closing of state institutions for people with developmental disabilities. We absolutely are not. Further, we understand it is important that the effort to close these institutions be fully funded by the state so that people with disabilities can live in the most integrated setting appropriate to their needs.

Sincerely,

Deborah Howlett, President

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Filed under AARP, Bruce Springsteen, Debrorah Howlett, Gov. Chris Christie, health care cuts, Middle Class, New Jersey Policy Perspective, NJ State Budget, School cuts, service cuts, tax breaks for the rich, Trenton