Category Archives: Taxes

As A Matter Of Fact ….What Do Taxes Pay For? A Better Quality of Life for Our Children

January 25th, 2012, by Jon Whiten Published in NJPP Blog: As a Matter of Fact …


While it’s a well-worn cliché that “nobody likes to pay taxes,” one question isn’t asked often enough: what do those taxes pay for?

According to a new national study, they pay for a higher quality of life for our children.

Investing in Public Programs Matters: How State Policies Impact Children’s Lives, released last week by the Foundation for Child Development (FCD), finds “a strong relationship” between state tax rates and the overall quality of life for children.

The report’s key findings are that “higher state taxes are better for children,” and that “greater investments in government programs are strongly related to better quality-of-life for children in a state.”

The report, along with the annual KIDS COUNT data book that ranks New Jersey fifth — comes as states around the country, including New Jersey, are reacting to fiscal crises with austere, cuts-only spending plan, and it shows the folly of such an approach.

“Although states are currently revenue-starved, this is exactly the wrong time to reduce taxes,” says FCD president Rudy Takanishi. “The revenues generated by taxes should be used to invest more in the education and health of our children. Policymakers must recognize that the cost of shortchanging children today is too high a price to pay in the future.”

There’s good news here for New Jersey: the Garden State ranked first in the nation on the Child Well-Being Index, barely edging out Massachusetts. This finding, based on 2007 data, reaffirms the need to resist further cuts to education and other crucial public programs.

The stakes — our children’s well-being, and our state’s future prosperity – couldn’t be higher.

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Filed under As a Matter of Fact, blog, Child Well-Being Index, education cuts, Foundation for Child Development (FCD), Kids Count, New Jersey Policy Perspective, quality of life, tax cuts, Taxes

>NJPP Monday Minute 1/10/11: NJ EITC: Governor’s No Tax Pledge Ignores Poor Working Families

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Amid the celebrating about extending federal income tax cuts to everyone in the year ahead, New Jersey is ringing in the new year with a substantial tax increase. Not to worry, though, the only ones who will be paying more in taxes are those who can least afford to pay more.

The state saved $45 million in the current year budget when it slashed a tax break given to families scratching out a living just above the poverty line. This tax break called the Earned Income Tax Credit (EITC) provides a credit to working poor families against the tax they might pay on the income they earn. The New Jersey EITC is calculated as a percentage of the federal EITC. The state reduced that percentage last year to 20 percent from 25 percent of the federal credit (a 20 percent cut), starting January 1, 2011.

This change will result in a $300 loss to a single parent raising two children with a minimum wage job that pays $15,000 a year. That amounts to more than one week’s pay. Even with the extension of federal tax cuts in Washington, working poor families in New Jersey will be less well off in 2011 than they were in 2010.

While the Christie Administration said the state could not afford to sustain the 25 percent credit to the poorest families in the coming year, the Governor and the Legislature have been willing to increase tax credits to major corporations by hundreds of millions of dollars.

Here’s just one example of many. Through the Urban Transit Hub Tax Credit program, the state approved three 10-year tax breaks that will benefit Wakefern Corporation, which operates the Shop-Rite chain of grocery stores. Wakefern itself received a $29.2 million grant in August and will benefit from another $15.7 million grant to its landlord. In December, it received a third grant for $58 million. Wakefern certainly must have been pleased to get these tax breaks. Especially since all it had to do was locate three warehouses in Newark and Elizabeth, which it might have done anyway. The state, on the other hand, will lose up to $103 million in corporate tax revenues over ten years if Wakefern fulfills the grant requirements.

Tax credits are set up to encourage certain behavior. The governor and legislators choose to believe that offering tax credits to corporations will encourage them to do what they otherwise might not do. They are even willing to give away billions of dollars with little proof that these incentives cost more than they benefit the state.

Evidence does exist that the EITC encourages people to work rather than accept welfare. By leveling the playing field for families at or below 200 percent of the federal poverty level (that’s $36,620 for a family of three in 2011), it encourages them to work. The credit is designed to help offset the high cost of living in New Jersey (which ranks fifth among all states) and compensates them for paying a disproportionate share of their income in regressive taxes, like sales and property taxes.

Gov. Christie pushed for and the Legislature approved a cutback in the EITC despite the opposition of working parents who depend on these funds to support their children and in the face of objections from advocacy organizations representing these families. It was the wrong thing to do at a time when so many poor families are struggling.

New Jersey has become a state that cuts taxes on millionaires and corporations but raises them on the state’s poorest working families. The EITC is a good investment for New Jersey’s workers. In the coming fiscal year, the governor and the legislature should find the $45 million necessary to help people help themselves.

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Filed under Earned Income Tax Credit, Gov. Chris Christie, Monday Minute, New Jersey Policy Perspective, Taxes, working poor

>President Obama’s weekly Adress 11/6/10 :Priorities on Taxes

>President Obama lays out his priorities for the coming discussion about tax cuts, calling for compromise but making clear he cannot accept $700 billion in deficits or an increase in middle class taxes.

http://www.whitehouse.gov/sites/all/modules/swftools/shared/flash_media_player/player5x2.swf

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Filed under Middle Class, President Obama, tax cuts, Taxes, weekly address

>It’s Official, Special Budget Meeting Scheduled For Monday In Middletown

>It’s Official! Monday night August 30th during a special meeting of the Middletown Township Committee, the Township operating budget will be introduced to the public.

The following announcement was posted on the Township’s website:

August 30, 2010 Special Meeting

Notice is hereby given that an “Open Public Meeting” of the Township Committee of the Township of Middletown is hereby scheduled for:

Date: Monday, August 30, 2010

Time 6:00 PM Budget Meeting

Place: Middletown Town Hall

Conference Room
One Kings Highway
Middletown, NJ 07748

KNOWN ACTION ITEMS:
Introduction of Amendment to the 2010 Municipal Budget (Public Hearing to be held September 7, 2010 at a Regularly Scheduled Workshop Meeting)

These items are subject to change, information will be updated on our website.

I would expect the meeting to be short in length with not much oppertunity for the public to make comments – that will have to wait until the workshop meeting on Sept. 7th.

That however, shouldn’t be a reason for interested parties to stay home. This meeting is of significant importance to residents who feel that they are being taxed out of their homes by the Republicans that sit in the majority on the committee, the new tax rate will be announce and residents will then be able to figure out what their property taxes for 2010 will end up being.

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Filed under Middletown, special budget meeting, Taxes

Middletown ranked in the “Top 100 places to live in United States, but what does it mean?


Money Magazine recently came out with its annual list of the “Top 100 places to live in United States” for 2010; kudos goes to Middletown for once again making the list at #89 and being the fourth town from New Jersey to make the list this year. With this honor, Middletown has now found itself on this prestigious list for the third time in the last five years; previously Middletown made the list in 2006(#50) and 2008(#86).

In determining Middletown’s spot on the list, MONEY Magazine sighted a strong sense of community, its low crime rate, great school system and the abundance of cultural and leisure activities available to residents, which makes Middletown a really wonderful place to raise a family and for that reason, I consider myself truly blessed to call Middletown home.

In a press release announcing Middletown’s third appearance on MONEY’s Top 100 List, Mayor Gerry Scharfenberger is quoted as saying “The designation speaks volumes about our success in maintaining the highest quality of life possible”.

But does it?

What does this ranking really mean? Does it really merit the praise when NJ Monthly Magazine ranked Middletown as only the 134th (down 20 places from its 2008 survey) best place to live in New Jersey and only the 10th best place to live in Monmouth County back in February?

Both magazines used crime rate, school performance and proximity to services as leading indicators for their rankings. MONEY seems to have placed more emphasis on the superficial like “air quality” and leisurely activities, whereas NJ Monthly used more tangible criteria such as population growth, home values, property taxes, land development and unemployment rates to determine its ranking, which I believe leads to a more honest assessment of Middletown. It’s no wonder then, that there was no press release in February praising NJ Monthly for its brutally honest appraisal of Middletown’s standing.

Like good politicians do, Scharfenberger wasted little time attempting to take credit for the news from MONEY Magazine even though he had little to with its findings, unless of course if you consider Middletown’s decline in the survey.

Since Scharfenberger has been in office, Middletown’s ranking in MONEY Magazine “Top 100 Best Places To Live” went from #50 to #86 to #89 — a 39 point decline. During his first term we saw a 36-point decline.

It seems that Mayor Scharfenberger and the Republican majority are eroding the quality of life in Middletown. If he and his friends were doing a good job we should have been ranked #31 by now. The Township is trending out of the Top 100.

Seeing that the quality of the school system was a leading indicator in the survey and that the mayor’s much publicized battle with the teacher’s union and the Middletown Board of Education over the school budget this past May, may have had an effect on the Township’s place on the list, let me put it another way. Scharfenberger’s municipal ‘Best Places’ report card shows a grade point average declining over three marking periods with 11 other cities having a lower GPA and 88 with a higher GPA. He has essentially moved Middletown to the bottom half of the last quarter, of the best places to live.

Since Gerry Scharfenberger and his Republican majority have been in office, our municipal taxes are up over 25% and moving upwards, to over 30% if the currently proposed budget is adopted on July 19th.

Here’s a question that should be asked of the people at MONEY Magazine: What does it cost in individual tax dollars to be ranked 89; do the better ranked cities get more bang for the taxpayer buck than lesser ranked cities? It seems that the Middletown residents as a whole were paying less in taxes when we were ranked at 50 than we do now; what happened?

Whatever happened to the dedicated and disciplined pursuit of excellence? I guess it wasn’t part of the survey.

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Filed under Gerry Scharfenberger, GPA, Middletown, Middletown Board of Education, Money Magazine, NJ Monthly Magazine, Taxes, top 100 places to live

Here’s An FYI On That Call For Change On The Middletown Board Of Ed.

Below is the text of another email that is circulating around that was written by Middletown resident Kathy Noah. This email is a direct counter to the anonymous letter posted by someone calling themselves ” Jersey Strong” that was making the email circuit tour and was posted on another out of town, local blog that has been known for its right-wing views:

Yikes! People like this scare me!

I did a little checking into this group/person. The word around town is that the 3 guys running are fairly well tied to some of the people on the Middletown Town Council. I don’t have a big problem with that, except I hear that the Town Council is looking to have more say over the Board of Ed. I don’t think people should be voting in less qualified people just so it will make life easier for the Town Council. I think we should be voting on the best qualified person for the job. I guess using the word “job” is not right considering it is not a paid position.

This person/group who wrote this seems to think that the Middletown Board of Ed should be breaking the union. This is a very big fight, and it would need to be addressed at the state level. When the contract with the teachers was negotiated it was considered to be fair and comparable with other local teacher’s union contract. The BOE did request that the teachers consider taking a pay freeze, the the local union leadership did not allow the teachers to take that vote. The union does have the right to work out their contract as written. I do think you will see some changes in the upcoming contract negotiations.

The idea that “you don’t like how life is, so let’s bring in all new people” is just crazy. The fact that our Real Estate taxes are tied to the quality of the education that our children receive is another broken system. This is not something that the BOE or the Town Council can fix. It must be dealt with in Trenton. We need people who are smart and dedicated, and they must have the children’s needs at heart. I think the people on the BOE work very hard to do that. I question the dedication of some of the gentleman this person is recommending. Mascone did not show to the 1st Candidate Forum, nor did he even have the courtesy to respond that he would not be attending. Brand also did not attend the forum, but he sent a very long statement that did not really say much. Hard to know what you are really getting with them.

They also seem very concerned with the number of Administrators that the district has. They do plan to cut 7 (15%) with the proposed budget! These people have big job descriptions including curriculum, state testing, staff oversight & evaluations, student discipline, security, oversight of sports & clubs, etc. I am sure years ago you expected 1 vice principle to handle all the discipline for 1,500 students, and security was not a big issue. Times have changed. In a corporation of 1,500 employees, 10,000 daily guests/students and 17 buildings how many managers and Vice-Presidents would you expect to have?

One of the only things I do agree with them on is nobody wants their taxes going up. Unfortunately, New Jersey is in a fiscal crisis, and Governor Christie has forced large cuts everywhere. He decreased state aid to our school alone by 34%, and some schools lost all state funding. We all pay a lot of income tax to the State of NJ, so I personally have a hard time understanding how this is fair. Considering these drastic cuts the Board of Ed did their best to come up with the proposed budget.

Voting down the school budget on April 20th will still mean Middletown will lose 72.5 teachers positions, 7 Administrators, 20 Para professionals, etc.

If this budget fails, these cuts will still happen and even more will be cut. That means more teacher cuts and larger class sizes. Most likely all Middle School sports and clubs will be eliminated. Maybe the Freshman teams will be lost too. To stay on a sport you cannot miss too many days of school & you must keep your grades up. Not all kids are the perfect academic student by nature. We need ways to keep them interested in going to school and learning.

APRIL 20th VOTE YES!!!!!!!!!!!!!!
4 PM – 9 PM

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Filed under Gov. Chris Christie, Middletown Board of Education, School Board elections, Taxes

NJPP: Taxes not to blame for NJ wealth exodus

Last week the New Jersey Chamber of Commerce and the Community Foundation of New Jersey released a report they commissioned from the Center on Wealth and Philanthropy at Boston College. This report ties the wealth of households to migration patterns in and out of the state.

It finds between 2004 and 2008, there was a moderate increase in the number of wealthy households moving out of New Jersey and a decline in the number moving in. The net effect of this, according to the report, is a substantial decrease in household wealth and charitable capacity.

The business community and various politicians are using this study to make the claim–yet again–that this exodus of wealth is a reaction to taxes such as New Jersey’s millionaires’ tax. They make this claim despite the fact that the analysis doesn’t include taxes as a variable and the report doesn’t mention them–except to say that only 6 percent of the wealthy people moving out have incomes over $500,000 (the starting point of New Jersey’s highest tax bracket).

The report looks at wealth (real estate, stocks, bonds, 401ks and vehicles) because it says investable assets are a more important determinant of charitable giving than income. But the study is being used as proof that there is a rush of wealth AND income out of New Jersey.

To the contrary, the number of high income households in the state has increased sharply during this period.

Actual tax return data from the New Jersey Department of the Treasury confirm that the number of tax returns with incomes of $500,000 and above has been growing. The current recession may tell a different story in more recent years, but in 2007 (the most recent data available), 48,500 tax returns were filed with incomes of $500,000 or more. This is nearly twice the number (25,500) filed in 2002. In each year since 2002, the number of these high income returns has grown. Their collective income in 2007 was $76.9 billion and they paid $4.6 billion in taxes to the state. Although their income was taxed at a top marginal rate of 8.97 percent, they paid an effective rate of 6 percent ($4.6 billion/$76.9 billion).

This report only looked at a ten year period–and that period just happened to be the decade when New Jersey increased income taxes on the state’s wealthiest residents. But what if the report looked at a twenty year period? It’s possible the data would show the same trend–younger people moving in have higher incomes and less wealth; older people moving out have more wealth and lower annual incomes.

What this study might suggest is that New Jersey doesn’t import wealthy people; it creates them. The report finds that the people moving to New Jersey are younger, earn higher incomes, and are more frequently employed than the wealthy people leaving. It makes perfect sense that younger, mid-career people would have less wealth because their retirement accounts would be small and their houses are probably mortgaged.

In contrast, the wealthy people leaving tend to be older, are more commonly retired or widowed and have more wealth. It’s likely that these older retired people are taking with them retirement and investment accounts and the cashed out untaxed capital gains from houses that have appreciated in value many times over the original purchase price.

New Jersey is, quite frankly, a rich state. We all know that.

In 2007, we had the second highest median household income in the country (after Maryland). We ranked third after the District of Columbia and Connecticut in per capita personal income. And in the same year, New Jersey and Maryland tied as the states having the highest percentage of households (7.1 percent) with at least $1 million in assets. These factors are unlikely to change overnight.

BUDGET SERIES

Understanding the state budget and its underpinnings are critical to any policy decision that will be made in this state. State budget decisions affect the lives of every one of the 8.7 million people living in New Jersey. They influence how much we pay in income and property taxes; the condition of our schools and healthcare facilities; the access we have to job opportunities in the public and private sectors; and the sense of security we have in our communities.

Starting next week, NJPP’s Monday Minute will begin a series devoted to issues surrounding the New Jersey state budget. Our plan is to start with a discussion of the state’s current and long term structural deficit; the taxes that support state and local spending; and simple analyses of the programs that these taxes support. Each week we will focus on something new.


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Filed under median household income, New Jersey Policy Perspective, NJ Chamber of Commerce, Taxes, wealth exodus