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FlyingCow
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The following is an article from the Home News Tribune written by a friend of mine who covers the Trenton beat.

His comment? "Only in New Jersey."

quote:
Flood and confrontation mark day at Statehouse
Posted by the Asbury Park Press on 06/29/06
BY JONATHAN TAMARI
GANNETT STATE BUREAU
TRENTON As flood waters surged onto roads outside the Statehouse, tempers spilled over indoors Wednesday during a long day of high political theater that produced little movement in a rapidly escalating budget showdown.

The day featured a six-hour stand-off between Gov. Jon S. Corzine's administration and Assembly leaders over Corzine's plan to increase the sales tax, a brief but heated public confrontation between the head of the state Democratic Party and a key assemblyman and the curious absence of one member of the budget panel, all set against the backdrop of an impending flood threatening to close state government even before the budget gridlock does.

In the end, a flood emergency chased government workers from Trenton, and a compromise on Corzine's $30.9 billion spending proposal seemed no closer. Lawmakers warned of a government shutdown if the budget is not signed close to the July 1 deadline. A shutdown could close casinos and state parks, maybe even during the Independence Day holiday weekend.

The strange turns punctuated two days of rising acrimony over the budget that spiked when Corzine said in a Tuesday night radio appearance he would veto the Assembly's plan to pass a budget without his $1.1 billion sales tax hike.

With the Democrats on the Assembly Budget Committee hoping to advance their proposal anyway but facing a risky vote because two of their members have sided with Corzine, splitting the panel in half committee chairman Assemblyman Louis Greenwald, D-Camden, instead demanded that the state treasurer drop everything and report to the panel.

"The administration has some explaining to do," Greenwald said, and ordered an Assembly sergeant-at-arms to summon Treasurer Bradley Abelow. "This committee will not adjourn, we will not recess, and we will not take up other bills for consideration until we've had the opportunity to discuss this crisis."

Assemblyman Joseph Cryan, D-Union, chairman of the state Democratic party and a Corzine supporter, immediately confronted Greenwald, and the two were separated by Assemblyman Albio Sires, D-Hudson, a former Assembly speaker.

Abelow snubbed the committee, however, and did not show.

Greenwald kept waiting, taking no testimony or other action, but eventually closed the meeting at 5:40 p.m., roughly six-and-a-half hours after issuing his ultimatum. He cited the flood emergency and, on his way out of the building, said he had made progress.

Treasury Department spokesman Tom Vincz said Abelow was busy managing state property as the floods approached and preparing for a possible government shutdown.

"I don't think a lot of hootin' and hollerin' is going to get us the right response," Corzine said.

Sen. Bernard Kenny Jr., D-Hudson, who has supported Corzine's budget, said the divisions have turned personal. He said the Senate supports Corzine and will not advance a budget that faces a certain veto.

"What happened today in the Assembly committee was something that should not have happened," Kenny said. "They should have been there to do their business and not to have that sort of confrontation."

Half of the 12 members of the Assembly Budget Committee two Assembly Democrats who support Corzine and four Republicans who oppose any tax increases oppose the Assembly Democrats' budget, putting its fate in doubt.

But Assembly Speaker Joseph J. Roberts Jr., D-Camden, said he could still get the bill through.

"There's developments during the course of a meeting that allow you to get things achieved," Roberts said. "The bills wouldn't have been posted unless there was the expectation that we would have advanced them today."

Some procedural quirks allow for passing a bill despite a split committee.

Sires was only at the meeting because Assemblywoman Joan Quigley, D-Hudson, was mysteriously absent. Quigley, who is said to be another possible vote against the Assembly plan, did not respond to a phone call seeking comment.

Wearing a broad smile, Kenny, the Hudson County Democratic Party chairman, said Quigley "didn't feel well" in the morning but was better by afternoon and wanted to retake her spot on the panel.

"I wouldn't pre-judge her vote," Kenny said.

Kenny warned that with both sides digging in, party-planners hoping to use state parks over the July 4th weekend should beware.

"They should make plans," Kenny said, "but they should have options."



[ July 06, 2006, 04:08 PM: Message edited by: FlyingCow ]

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Tante Shvester
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It just slays me that a guy with no political experience bought the election to become a US Senator (spending more on his campaign than anyone in the history of Senatorial campaigns), and then, before he even finished serving his freshman term, bought the gubernatorial election and left the Senate to be Governor.

He is one rich guy. And he wasted no time in going back on campaign promises not to raise taxes.

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Zamphyr
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That doesn't bug me as much as a committee head thinking that doing absolutely nothing for six and a half hours is "progress".


It's only progress if he's docking his own salary during that time [Roll Eyes]

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FlyingCow
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So, NJ Casinos were forced to close today because of the state government shutdown.
Linky.

The state is now losing $1.3 million per day in lost tax revenue because Corzine wants a 10% budget increase that calls for 16.7% sales tax increase, and a bunch of sane people don't.

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FlyingCow
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So, the state is still closed, and it doesn't look like there's going to be much compromise soon.
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Strider
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The casinos must be going crazy. This could probably put Trump into bankruptcy again.
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The Pixiest
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So the republican wants to raise taxes and the democrats don't? Did I read that right?

.... We're doomed.

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Tante Shvester
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New Jersey is closed all right. Every last exit!
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FlyingCow
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No, they're all Dems. New Jersey doesn't have Republicans - at least none with any voice or power in government.

The nutjob Democratic governor wants to increase spending by $30.1 billion, which increases the budget 10%. To do this, he proposed an increase from 6% to 7% sales tax (a move that prompted the state to hate Jim Florio in the early nineties before Whitman switched it back).

He has further said he will veto any budget proposal that does not include his spending package and the sales tax increase - then has the gall to say the Assembly is causing the problem.

The Dem party is split over this. A bunch support Corzine for political reasons, as he swings the biggest axe in the state. A bunch are sane and oppose what would be an enormously unpopular move.

Supposedly, there's enough votes to pass a budget with no sales tax increase, but it will get vetoed. There are not enough votes to override a veto.

So, money is just swirling down the drain at the moment, and all emergency state employees (like police) are operating without pay.

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FlyingCow
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Well, I guess I was wrong about them not beign close to a compromise.

So, sales tax just went up a penny on the dollar. Supposedly this will cost the average family about $250 per year.

But, with Pennsylvania still at 6%, and there being so many ways in and out of PA, I'm sure businesses close to the border will suffer. I'm very curious what sort of backlash Corzine will feel at the polls next election - if it's anything similar to what happened to Florio.

I mean, you have to be outright terrible in this state for your successor to be a Republican.

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Tante Shvester
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quote:
The deal will increase the state sales tax from 6 percent to 7 percent and use half the $1.1 billion that it will raise to help lower property taxes, which are among the highest in the nation.

It allows the possibility that, in future years, the entire increase will go to property tax relief.

Can someone explain to me how this can be a good thing? It seems to be all wrong. What is the point of raising a tax and using the proceeds for tax relief? Especially raising funds through the most regressive form of taxation, the sales tax, to benefit those state citizens who own the most valuable property.

I
just
don't
get
it.

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Dagonee
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Many think property taxes are regressive.

An introduction to the arguments on both sides.

quote:
Property tax has been held to be regressive (that is, to fall disproportionately on those of lower income) because of its impact on particular low-income/high-asset groups such as pensioners and farmers in drought years. Because these persons have high-assets accumulated over time, they have a high property tax liability. However, their current income level is low. Therefore, a larger proportion of their income goes to paying the property tax. In areas with high real estate appreciation (such as California in the 1970s and 2000s), there is often little or no relationship between property taxes and a homeowner's ability to pay them. The regressive nature of the tax was a common argument used by supporters of California Proposition 13. Others, however, have argued that property taxes are broadly progressive, since people of higher incomes are disproportionately likely to own property. These two points of view are not completely incompatible - it is possible for a tax to be progressive in general but to be regressive in relation to minority groups. As a result of these contradictions, some economists have called for the abolition of property taxes altogether, to be replaced by income taxes, consumption taxes such as Europe's VAT, or a combination of both.
They're also a leading cause of gentrification.

I don't know how to compare the relative regressiveness of each. Does NJ sales tax exempt food and medicine?

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FlyingCow
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I don't know about medicine, but food and clothing are not covered by sales tax in NJ. Many New Yorkers come to NJ to shop for clothes and shoes, as the savings in tax outweigh the expense of the tolls to get here and back.

One of the ideas they'd thrown around was taxing clothing, and the negative backlash was crazy. My friend at the paper said he felt that was floated as a worst case so that the sales tax increase would go down easier.

Either way, the last time the sales tax was increased from 6 to 7 percent, the governor responsible (Jim Florio) was vilified for the rest of his term.

And to show a little more of Corzine's political character:

quote:
Six years ago, Corzine successfully ran against former Gov. Jim Florio in that year's Democratic primary. The Associated Press reported Friday that in a debate with Florio, Corzine described the sales tax as "the most regressive of taxes, the one that falls on the people least able to pay for it.

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Tante Shvester
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Regressiveness aside, can you explain to me why it makes sense to raise a tax and earmark the proceeds for tax relief?
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King of Men
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Certainly - easy-peasy! First, you smoke this giant reefer...
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Dagonee
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quote:
Regressiveness aside, can you explain to me why it makes sense to raise a tax and earmark the proceeds for tax relief?
Sure. I know at least two people having trouble keeping their house in NJ because of property taxes. One of them has property taxes nearly double what her mortgage was before she paid it off. Her fixed income simply can't support this, considering one of the planning premises for the amount of the fixed income was no longer having a mortgage.
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fugu13
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Raising a tax to lower another tax in an income-neutral way that reduces overall hardship for residents strikes me as an excellent reason to raise a tax. Any other method of restructuring taxes is asking for deficits or detrimental surpluses (as opposed to those created by improved provision of government services).
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Tante Shvester
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The governor says that it is necessary to raise taxes in order to close a budget deficit. How does earmarking the funds for tax relief help to meet that goal?
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FlyingCow
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How does adding a $3 billion dollar spending increase help close a budget deficit, is what I'd like to know.
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Vast Left-Wing Conspiracy
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quote:
Sure. I know at least two people having trouble keeping their house in NJ because of property taxes. One of them has property taxes nearly double what her mortgage was before she paid it off. Her fixed income simply can't support this, considering one of the planning premises for the amount of the fixed income was no longer having a mortgage.
Why does NJ have such high property taxes? Does it have anything to do with the fact that the two biggest population centers are the suburbs of major cities in other states?
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fugu13
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I don't know much about the NJ plan, I'm only commenting in the abstract on the notion of raising one tax to lower another.
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Gwen
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It seems like it would make more sense to lower property taxes in general, or for the bracket having a problem with them, than to give tax money for tax relief. Is there some sort of screening process for who gets the tax relief, that couldn't be part of the property tax code?
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fugu13
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That sounds like an excellent recipe for extreme inefficiency and corruption.
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Gwen
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It seems more efficient to lower a certain tax than to raise a different tax in order to provide tax relief for people suffering from the first tax. Isn't that your point?
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fugu13
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No. Just lowering a tax reduces revenues, causing either deficits or program cuts (not an awful thing, but often hard to do and requiring significant planning on which programs to cut). Lowering one tax while raising another can be revenue neutral, requiring no changes in government behavior other than with the two taxes.
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Dan_raven
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quote:
New Jersey Open Again
You say that as if it were a good thing.
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Dagonee
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quote:
Originally posted by Vast Left-Wing Conspiracy:
quote:
Sure. I know at least two people having trouble keeping their house in NJ because of property taxes. One of them has property taxes nearly double what her mortgage was before she paid it off. Her fixed income simply can't support this, considering one of the planning premises for the amount of the fixed income was no longer having a mortgage.
Why does NJ have such high property taxes? Does it have anything to do with the fact that the two biggest population centers are the suburbs of major cities in other states?
I also don't know why. I'm sure the property values are high because of that, but I'm not sure why that would increase the need for tax revenue so much.

quote:
It seems like it would make more sense to lower property taxes in general, or for the bracket having a problem with them, than to give tax money for tax relief. Is there some sort of screening process for who gets the tax relief, that couldn't be part of the property tax code?
The problem with lowering them for a single bracket is that there really isn't a bracket for property taxes. It's based on the value of the property.

If you put in different property tax rates for different income levels, you have a hybrid tax, a property-income tax if you will, which is an entirely new type of tax.

Which sounds harder to implement than merely raising the rate on an existing tax.

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FlyingCow
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New Jersey funds its schools through property taxes. New Jersey has some of the best, and best funded, school systems in the country. Towns vote for budgets for their schools that increase property taxes.

Adding on to this, Newark pays virtually no property tax at all - most of the town is in economic redevelopment, with government tax deferrals to companies that build (ten years or more deferred). The same goes for many of north Jersey's urban centers. County taxes are used to fund the schools in these areas, causing nearby suburbs to feel an incredible tax pinch. (Some homes in Millburn had their taxes adjusted up 250% a few years back, prompting talk of secession from the county)

Plus, property values are increasing rapidly, as more and more people are buying property along train lines to and from NYC. People move to NYC to make their fortunes, then once they have money move out to NJ or Connecticut.

Also, NJ government is heavily dominated by Democrats, with Republicans that would get elected as Democrats in many other states. Tax increases have been the norm for a couple decades.

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