Thursday, May 28, 2009


A good piece recently appeared in the Wall Street Journal’s Opinion Journal titled “New Jersey's Flat Tax Debate: Christie's cheap shots can hurt everyone” (no author credited).

The item discusses a proposal by Republican gubernatorial candidate Steve Lonegan, former Mayor of Bogota, to replace Jersey's graduated income tax that has rates running from 1.4% to 8.97% with a 2.98% flat tax on the first dollar of income earned. The “flat tax” is opposed by rival Republican candidate Chris Christie.

This is like Pennsylvania’s current flat tax on all taxable income of 3.07%. The PA state income tax system is similar to the NJ Gross Income Tax (actually PA came first – we stole it from them) in that it is a “gross” income tax with minimal deductions. It does not allow losses in one category of income to offset income in other categories. If you have $10,000 in wages and $3,000 in stock market losses you are taxed on $10,000. However in PA income is taxed from “dollar one” – there is no personal exemption or filing threshold. PA does have a special “Tax Forgiveness” credit for lower income filers.

According to the piece, “If ever a state were ripe for bold economic reform, it would be New Jersey, which is shedding jobs and is in perennial budget crisis despite one of the highest tax burdens in the land”.

Candidate Christie’s ads claim that the flat tax isn't fair because it would raise taxes on "almost 70% of working families." But “Mr. Lonegan counters that only 40% would pay more -- by an average of less than $300 for a family earning $20,000 -- and their tax liability would still be lower than in New York and Pennsylvania. The average New Jersey family's tax bill would fall by $1,000 a year.”

In defending his flat tax on the first dollar Lonegan says what I have been saying for quite a while now about the federal income tax – “every working New Jersey resident should pay something -- on the principle that everyone should bear at least some of the cost of government”.

The item points out that under current Governor Jon “Big Disappointment” Corzine and his predecessor Jim “Gay American” McGreevey NJ has enacted “103 tax increases, including income and sales tax rate hikes”.

And “from 2001 to 2008, New Jersey lost a net 25,000 private-sector jobs even as public employment grew by 65,000 workers”. Since government workers will vote for the Democratic party this makes good political sense, although horrible public policy. But then we residents of the Garden State all know too well that NJ politicians only care about maintaining the “status quo” and fattening their own wallets, and those of their supporters, and don’t give a horse’s arse about what is best for the state.

I support Steve Lonegan’s flat tax proposal, and am leaning toward voting for Steve in the primary. Christie made his name putting away NJ corrupt politicians – and while he made a good start he barely scratched the surface since most NJ politicians remain in office (if he were able to put all NJ corrupt politicians behind bars we would need to annex Rhode Island as a prison) – but he is basically a “one hit wonder”, so to speak, and he has the backing of the state’s existing Republican leaders, which is not necessarily to his credit.

Another thing I like about Lonegan - he has said that the NJ Homestead Rebate is "a gimmick". Talk about hitting the nail on the head. Let's call a spade a spade - it is a political gimmick intended to buy votes.

One thing is sure – New Jersey needs to “Get a GRIP” (Get Rid of ALL Incumbent Politicians) in the coming election!



Lynn said...

I can't wait for this primary to be over. If I receive another phone call from Chris Christie, Rudy Guiliani or Mitt Romney (just today) I am going to scream. Is Chris Christie that nervous about winning that he even had his wife send out a letter with a picture of him reading to his daughter. What a waste of money. I just want a person in there who can get Corzine out of office. Our state is such a joke. And its not a funny one at all.

Can you explain what it means when there is a flat tax on the first dollar of income earned? Does that mean I will only pay 2.98% of $1.00? Of course it can't mean that. I could only wish. I wouldn't mind a flat tax on 2.98% of all income. How would that work for those of us that work in NYS? I wish they would come up with an easier tax return. I hate the NJ 1040 since I work in NY and my husband works in NJ.

I haven't made up my mind on who I am voting for but I like the idea of a flat tax.

Robert D Flach said...


Check out the Friday (5/29) post for your answer.