New Jersey: "The Perfect Bad Example"

New Jersey: “The Perfect Bad Example”

Guest Case Study by New Jersey General Assemblyman Jay Webber

“The Perfect Bad Example.” That’s how one national newspaper recently described New Jersey and its chronically mismanaged government this decade. Taxpayers in New Jersey must work 249 days out of 2009 just to pay for the cost of government. It is no mystery how New Jersey’s Cost of Government Day falls on September 6th, 25 days later than the national date: bad policies and weak leaders.

Since 2002, the average family of four in New Jersey has seen a state tax increase of more than $10,000, a wallop to the wallet by far the worst in the entire nation. The state’s citizens have been saddled with a cumulative tax increase of $21.2 billion from FY2003 to FY2009. We have experienced 108 new or increased taxes in just 8 years—on income, sales, estates, employees, employers, home sales, televisions, phone bills, motor vehicles, tires, and many more items. And that does not even count the state’s record-setting property taxes, which have skyrocketed 54.8 percent since 2002 and amount to $6,500 per household. New Jersey collects more property taxes per capita than any other state.

It is bad enough that New Jersey overburdens the present generation of taxpayers. But our relentless borrowing and refusal to meet current obligations already have placed heavy burdens on future generations. State debt and unfunded liabilities for state pensions and retiree healthcare add much more than $100 billion to the state’s toxic mix of high taxes and unchecked spending.

Those crushing costs of government are forcing our families, neighbors, employers, and capital to flee to low-cost states. New Jerseyans are voting with their feet in crisis proportions, seeking escape from oppressive taxes and finding refuge elsewhere. New Jersey has had a net outflow of residents every year for the past 10 years. In the last 6 years alone, a net 300,000 people have left the Garden State with another 100,000 expected to flee in 2009.

The social consequences of our mass out-migration are terrible. Families and neighborhoods are breaking apart as relatives and friends must scatter to find affordable living, jobs, or a reasonably comfortable retirement. With generations of families separating, ready sources of emergency daycare are drying up for New Jersey moms. Too many of our families now track each other via email and phone calls across state lines, rather than sharing in-state soccer games and Sunday picnics.

That exodus carries negative economic effects as well. The flight of our citizens has cost our state economy about $10 billion, with heavier losses to come. For the first decade since the 1930s, we will experience negative job growth this decade. The New Jersey experience shows that individuals and employers can and do relocate to states with better tax treatment. Two of the top destinations for fleeing New Jerseyans have been Pennsylvania and Florida, which have low income tax rates.

Despite New Jersey’s spectacular failures with its tax-and-spend ways, some argue that additional spending will cure our economic ills. But our collective experience tells us that that is the exact wrong thing to do. When our neighbors left for Florida and Pennsylvania, not a single one said, “We would remain in New Jersey, if only government spent more and taxed us more to pay for it.”

A vicious cycle has characterized New Jersey this decade: the more the state spends, the more our citizens are taxed; the more people are taxed, the more they seek refuge in low-tax states; the more who leave, the more that the economy and budgetary revenues decline, and the more pressures are placed on remaining residents and employers to support unsustainable tax-and-spend policies.

And the abuse and cruelty continue for our long-suffering citizens. In June, New Jersey’s government imposed new tax increases on payroll, income, businesses, insurance premiums, cigarettes, alcohol, and lottery winnings, while simultaneously suspending property tax deductions and rebates—a whopping $2.8 billion tax increase in the middle of a recession.

Those draconian tax increases will only destroy more jobs and drive more New Jerseyans out of their homes.

The tried-and-failed taxing policies of this decade should give way to policies like those championed by Presidents Kennedy and Reagan, who proved that tax-cutting generates true investment, powers sustained prosperity and economic growth, and increases government revenues at the same time. Our Garden State again should become an affordable place where citizens want to live, not a place they need to leave.

Photo credit: alan(ator)

<< Go Back Main Next >>

2009 Report

Case Studies

From the States - Guest Case Studies

Methodology
Chart Room
Media Coverage
Further Resources

2008 Report