Taking from the Makers

By Marlowe

A few weeks ago Governor Christie vetoed a bill passed by the Legislature, the so called, “Millionaires Tax”.  Stephen Sweeney, State Senate president, hand carried the bill to the Governor’s office and it was immediately vetoed.

The governor recognized this bill for what it really was, a tax increase on the rich.  It puts a penalty on those larger earners among us, and is an attempt at re-distribution of wealth within the state.  With the Bush tax cuts due to expire in 2011 the high earners will be hit with higher taxes at a federal level.

Democrats deny this and cite the need of the elderly and the disabled who depend on the rebates and assistance that comes from this tax as necessary, lifting a burden on those low and fixed income citizens of New Jersey.

Much has been said of those earning in excess of one million dollars in New Jersey. Approximately 16,000 people fall into this bracket. Statements such as “they can afford this additional tax”, and “it is only about 2 cents on each dollar” have been used. Some feel they should share more of the burden of the less fortunate and the elderly struggling to pay their bills. Property taxes, mortgages, prescription costs are often the issue.

While this sounds all fuzzy and warm on the outside, it presents an enigma for the Democrats who are mostly responsible for prior tax increases. The runaway property and school taxes, and the burdens placed on small business being the largest. These are all increased costs that are ultimately paid by consumers, the very people they claim to be helping.

I mention small business simply because many of the high earners among us are small business owners, who will see these higher taxes. Also included are many executives and others such as doctors who will foot the bill for the programs the Dems deem so necessary.

The Democratic legislature now wants to increase the burden on those larger producers and it blames Christie for ignoring those in need with his recent cuts to services and aid, and the elimination of the Property Tax Rebates.

It is my belief that Sweeney knew all along that this bill would be vetoed, and pushed it anyway as a means of discrediting Governor Christie.

The Democrats are attempting to patch a hole in their political ideology. The rebates have been a staple for them to maintain favor in Trenton, with the checks mailed out, not surprisingly, right before Election Day.

Lately the rebates were created from bonding (Borrowing) money, which created a liability on everyone and increased the debt service to the state, which in effect includes you and me.

Some have called the millionaires tax a Socialist idea, and it actually smacks of Marxism right from The Communist Manifesto. “From those that have to those that need”.
This mirrors the ideals of redistribution of property, (Our money), and a progressive tax based on earning level.

I often ask people who advocate this tax, “Would you rob your neighbor?” and the answer is always a resounding “No”.  The next question I always ask is “Then why would you let the government do it for you?”  With top earners somehow demonized, many feel its ok to take from them; after all they can afford it. The goal behind the question is to get people to see this type of legislation for what it really is, a form of welfare for those receiving the rebate, a carrot dangled in front of them.

Most people I know have no problem giving a helping hand to those in need, and the charity level here in New Jersey among our citizens is amazing. We don’t need the State to enact and ultimately mismanage another tax like it has with so many other well- intentioned (or not) programs, or have political parties use it as a tool at our expense.

Any program that takes from producers ultimately takes from everyone, and brings all of us closer to a centrally controlled economy where everyone is equally poor, and decisions are made by those that have an agenda to keep the status quo.

A 2-cents per dollar tax over one million seems small, but the numbers don’t lie, and each million equals $20,000.00 in taxes. Top earners that have the means may simply leave our state.  Any way it goes everyone loses and revenues for the treasury continue to drop.

Entrepreneurs and other risk takers aren’t likely to embrace this tax, and will do what they do best….survive. Others in business look at our state and are reluctant to move here, and seek states with much lower burdens such as Florida. Higher taxes erode the business climate that in turn creates a downturn in jobs and the amount of tax the businesses pay and collect.

I have yet to hear the word “Cut” from any of the Democrats. All of the talk being about other sources of revenue, and ways to increase income to maintain mostly social programs and entitlements which always translate to higher taxes or fees.

Schemes have included patching holes in the budget with the tire tax, hotel and motel room taxes, and the ever-popular real estate transfer tax, but not fixing the problem.  These tax burdens and the various programs that shift money around, along with reckless borrowing have put us in our current situation, and now with the millionaire’s tax in jeopardy, Christie has put them back on their heels and they are scrambling to maintain their political grip on New Jersey.

Although Christie’s budget is not ideal, and does not cut where it really can, it is a move against the “Tax and Spend” mentality in Trenton. It seems that the Democrats have still not gotten the message, and continue to pursue the same course that has put our state between a rock and a hard place while blaming it on factors such as the economy and the current recession.

Americans for Prosperity in New Jersey has unveiled a budget that actually makes the cuts in important places, preserves school funding, and shows where Christie has actually not cut the budget but used some of the same tactics of shifting money and preserving some entitlements and programs that need to be cut.

Mandates and taxes destroy job creation

I have become most concerned with the continuing decline of the profitability in the small business sector.  Stress factors of operating a small business have been taking a toll on the owners. The number of entrepreneurs who I see stressed to the point of desperation far outnumbers those doing well.

Demand is weak for products and services and the evidence is all around us.  Many businesses have closed which has passed more opportunity for the remaining to stay open.  Even with this too many owners are struggling to survive.  Consumers are purchasing the most necessary products, while other items sit on the shelf for extended time.  This ties up the cash flow necessary for a business to continue efficient operations.

The latest small business profile I can locate for New Jersey provides the data pointing to the importance of small enterprises in job creation.  Smaller businesses generally are at a disadvantage against large corporations.  The money pot is smaller, meaning less is available to ride out the hard times.  Also, purchasing power to bargain with manufactures is minimal because the quantities bought are smaller and typically not under contract.

The federal government and the State of New Jersey both have attempted programs to assist small businesses.  In an endeavor stimulate hiring, credits are offered if certain conditions are met.  But without purchasers, who needs another employee on the payroll?  Banks are being encouraged to loan to small businesses.  The proclamation was that this would aid businesses to weather the economic storm, invest in inventory and capital purchases, and hire.  The problem with this approach is the business now has a loan to pay and with the down economy the customers are not spending enough to justify and pay added debt.  This puts businesses at an even greater risk of failure.

Cumulatively small businesses fuel our state and federal governments not only by paying business taxes and employer taxes, but also by their collections of sales taxes and employee taxes.  The collection of taxes, performed with no state or federal compensation to the business, is a demanding responsibility.  Over the years, the amount of labor required to comply with the additional laws has increased.  The costs are passed on to consumers, much the same as government mandates that are passed to taxpayers.  They both entail labor-intensive duties that require significant time and money to administer.

A recent post describes the disposition of $5.4 billion diverted from the Unemployment Trust Fund (UTF). Both employees and employers paid into this fund.  Employers are facing a $1 billion tax to replenish the UTF.  Beginning on July 1st, shortfall bills will be sent with a levy for each employee.  When businesses face penalties such as this, hiring is stymied.  It is counter productive and hopes of NJ economic recovery dim.

NJ Senator Joe Pennacchio is imploring Senate President Stephen Sweeney to release a bill he is sponsoring (S-1854) that would reduce the impact on businesses.  Prior to a bill being released it is unavailable for the general public to analyze.  Pennacchio explains another consequence of allowing the fund to be raided, “Sadly, past diversions have depleted the fund forcing the state to borrow from the federal government. To date we have borrowed more than $1.4 billion to cover our obligations.”

Another job destroying mandate businesses will face is National Health Care.  The National Federation for Independent Business reviews five complexities in their publication, The Unaffordable Facts about the New Healthcare Law.  Governor Christie and Attorney General Paula Dow continue to decline joining the lawsuit against forced purchase of health care.  Although I heard him say that he had enough to do in NJ, Christie does participate in issues at a national level, examples here, and here, and here.  This is just one more national matter he needs to address that will adversely impact citizens and businesses.

The Health Care Freedom Amendment (SCR-81) sponsored by NJ Senator Michael Doherty and Assemblywoman Alison McHose, “Proposes amendment to Constitution to prohibit State or federal law or regulation from compelling a person to obtain, provide, or participate in health care coverage”.

We can contact Governor Christie to appeal he join the lawsuit and support the freedom of New Jersey citizens to direct their own health care. Contact the NJ Legislature and Sweeney to request S-1854 be released here, and your NJ Representatives to show support for SCR-81.

The continual onslaught of mandates and taxes destroys jobs that citizens rely on to feed their families and ultimately lowers the amount all government levels collect to fund services and programs.  NJ has used its small business community as a cash cow, and heaped many fees, taxes, and collection duties on it to fund various programs, and plug holes in the budget.

The taxing costs of health care

National health care

Some revealing information was presented in an article from the Associated Press.  Cost estimates for national health care range from $1 trillion to $1.6 trillion.  There are so many numbers and statements flying around on the proposal, I’m not sure from day to day how all the parties involved can keep them straight.

Subsidy expectations for covering the uninsured are being lowered in an effort to have the cost stay around the $1 trillion mark.  The cutoff incomes proposed to receive subsidies ranges from a high per family of $110,000: to as low as $22,000 of income for a family of four.

There is disagreement in the US Senate over imposing a tax on health insurance benefits as a way to help pay for the program.

“To pay for the legislation, Baucus [Chairman of the Finance Committee] has signaled he intends to propose a tax on health insurance benefits for individuals with the costliest health insurance coverage, possibly plans with premiums totaling more than $15,000 between employer and employee combined.

Other senators, allied with organized labor, have also expressed opposition, although Baucus has told reporters he could exempt health benefits included in union contracts from the tax.”

Exempting unions from a health care tax shows a total disregard for the importance of the private sector employers and employees.  Organized labor generally provides much better plans to their workers than the private sector.  Exempting unions would also put more demand on the private sector to ‘make up the difference’.

There is also concern that employees would opt out of employer plans to join the national health care program.  If this happens we would have “single-payer health care”, a phrase that is a major aspect of socialized medicine.

I guess if you advocate socialized medicine all the complications, cost overruns and intervention into private enterprises wouldn’t be a deterrent.  But for the conservative free market defenders, this is a growth of, and further intrusion by, government into our private lives and choices.  It conveys a belief that it is one more step up the ladder to communism.

New Jersey

Adding insult to injury, New Jersey is attempting to pass bill #A-4108 (S-2016) that increases the tax on group accident and health insurance premiums and also tax dental insurance premiums.   The expected annual ‘take’ would be $74.5 million from group accident and health insurance and another $5 million from taxation of dental services.  The money would be dedicated to the Health Care Subsidy Fund.  It is obvious the legislature wants to “fast-track” this bill because the beginning date is July 1, 2009.

Embedded in the bill is an intriguing statement.  16. a. “This act shall not apply to any fraternal beneficiary society.”  I’m not sure what groups this exempts because I did not find a definition in the bill of the particular societies this may exclude.  But I am suspicious that it would be most, if not all, police and maybe even numerous unions.  This skepticism is based on the wording found for “fraternal beneficiary society” on various insurance and legal sites.

Between the federal government and the state of New Jersey there is less ability, and desire, for people to escape poverty and entitlements. Businesses motivations to open, expand, and hire are already eroded by government interventions, regulations, and taxes.   Why would anyone want to make money or strive for betterment if further earnings would just be taken by the “taxman”?

Lonegan, Christie & Merkt on taxes

TAXES

Business and Corporate Taxes

Are we reaching the point where business owners are no longer working for a profit?  Businesses are in a bind as shown by the increases in closings and employee layoffs. Burdens imposed by government regulations, and taxes on top of the economic decline have created a very unfriendly business climate. Many business owners have invested their lives in the companies they run only to find themselves engaged in survival mode forcing them to make decisions that have negative effects on the economy and their employees.

Companies are not compensated for their tax collection services even though they act as agents of the state and government for these services.  Businesses contribute enormously to the economy through employment, the gratis tax collection, and other responsibilities dictated by the state of NJ.

Businesses are generators of employment, and collectors of sales and employee taxes.   By providing jobs, payments for unemployment are lowered.  Increased business will also create an environment where employers compete for workers.

The odds of business survival are not good even when the economy is vigorous.  Businesses now need to recuperate from high debt and inventory investment they are carrying because of the rather sudden and substantial decrease in consumer spending.

It seems that more and more that the employers are actually working to sustain their employees and the state of NJ.  It is the employees that get the paid vacations, paid sick days, and soon paid family leave: while many small business owners go without benefits and a regular paycheck.  The scales have tipped away from all the reasons business would want to open, or remain open in NJ.

Ultimately it is consumer who absorbs all ‘costs of doing business’ when they make a purchase; or employees who may be paid a lower wage or lose their job.

Steve Lonegan’s plan calls for elimination of business and corporate taxes.  He wants to eliminate the barriers to business growth.

Chris Christie has proposed lowering business taxes although he is noncommittal on the amount or timing of his proposed decrease, even after repeated requests.  But, Christie does have ideas of adding a few layers to the state.

“The Christie Administration will consolidate Trenton’s fragmented economic development activities into a new agency - “New Jersey Partnership for Action,” utilizing the resources of the current Economic Development Authority.”

“The Christie administration will overhaul New Jersey’s regulations – restoring balance and fairness – by creating a permanent “Red Tape Review Group.”  The “Red Tape Review Group” will bring both elected branches of government together in a bi-partisan fashion to perform a top-to-bottom overhaul of New Jersey’s Administrative Code [state regulations that have the force of law].”

“Where appropriate, rule-making scientific advisory committees will be established.”

Merkt states that he would refuse to sign anti-business bills passed by the Legislature and recognizes “that a state without business is a state without a future”.

 “The goal will be to reduce the number of permits, licenses, etc. a business needs to a more reasonable and manageable number. New Jersey depends on private industry to provide five out of every six jobs created in the state. It’s about time we made it easier for private industry to operate and grow in the Garden State, because our residents’ future employment depends on it, and with it, our state’s stream of tax revenues for needed public services.”

Personal Income Taxes

Steve Lonegan is proposing a flat tax beginning with 2.9%, decreasing to 2.5%, then to 2.1%.  Three recent endorsers of his plan are Dr. Arthur Laffer, NJ Taxpayers Union, and Peter Schiff.   Under our current tax policies Lonegan notes that,

“We are exporting wealth and importing poverty”.  Jobs are disappearing and low-income wage earners are losing their jobs, “that’s 100% tax”.  “New Jersey has a higher and more progressive income tax than any of its surrounding states. Therefore, New Jersey is at a competitive disadvantage to states such as Pennsylvania, Delaware, Connecticut, and even New York.”

Christie proposes retaining the progressive income tax, but cutting the rates across the board.  To date he has not answered to what amounts would be cut, or a timeline.  But states, “I’m taking my advice from Steve Forbes.”  Christie claims that Lonegan’s plan will raise taxes on a large majority of taxpayers and counters by saying,  “I believe everyone in NJ deserves a tax cut.”

Merkt would use the power of vetoes against any Legislative action that proposes a tax hike.

“State revenues have increased by 50% over the past eight years, yet Governor after Governor has failed to make ends meet and demanded that all of us pay even more in state taxes. The time has come to put an end to this reckless attitude, and I will do so as New Jersey’s next Governor.”

Sales Tax

Christie chastised Corzine for closing the state government in 2006 during the budget fight, and allowing earmarks for legislative pet projects.

Lonegan would roll the sales tax back to 6% after the budget is balanced.

Property Taxes

Christie would eliminate Aid to Distressed Cities Program that would save over $180 million.  The Public Advocate program (which is a NJ department) should go, savings unnamed.  Christie would retain the homestead rebates, even for seniors who make over $100 thousand a year.  He is also for encouraging consolidation and shared services in school districts on the municipal level.  He mentions that redundancy, and state mandates, are forcing up local property taxes.

“The Christie administration will end the use of PLAs [Project Labor Agreements] which create inexcusable waste on public construction projects and are a tool for political favoritism at a time when the economy is shedding jobs and taxpayers are struggling to make ends meet.”

“There will be a requirement that the law creating or expanding a program include clear and precise performance measurement standards so that the results of the program can be evaluated at the end of the “sunset” period.”

Lonegan proposes cuts to the state budget that add up to $8 5 billion (adjusted based on new figures for FY2009-2010 budget).  He would eliminate property tax rebates, which have been funded by borrowing money.  Instead, he calls for an equalization of school (Abbott) funding that will reduce taxes by about 20% for suburban homeowners.  Lonegan would end binding arbitration and project labor agreements that drive up costs on state and municipal projects by approximately 30%, adding to debt.

He would eliminate the Motion Picture Industry subsidy program for savings of $400 thousand, Department of the Community Affairs, Department of Labor and Workforce Development and Department of Public Advocate.  Any essential functions would be realigned to other departments.   He also wants to cut the Department of Environmental Protection to its core functions, realigning other functions elsewhere.  Department count would be reduced from 16 to 12 after the realignment.  “Downsize, prioritize, privatize”.  Favors home rule because he sees more efficiencies in smaller towns than in larger towns.  “What is forcing up local property taxes is not spending on the local level, it’s the state government itself “, states Lonegan.

Merkt is against homeowner rebates.  He describes it as a feel good political scam that has been going on for 30 years.  It is an excuse for real property tax reform.

“I think it’s a ludicrous idea to send money to Trenton in the hope that they are going to send it back to you.  If it’s your property and it’s your money, you should have it in the first place.  You shouldn’t have to send it to Trenton.  These property tax rebates have become nothing but a political gimmick as far as I am concerned.”

Merkt would make state budget cuts to the Distressed Cities Program, savings about $150 million a year, political subsidies to counties another $60 million a year, Urban Enterprise Zone (UEZ) sales kickbacks $100 million a year, South Jersey Port Payments, the Public Advocate, the Department of Redundancy Department.

This is my view on the rebates.  I see another problem with the property tax rebates.  The people who are in the most need of this money are in arrears in property tax payments to their municipalities or payments to their mortgage holders.  Municipalities can charge either 8% or 18% interest on the arrears.  If the property taxes are paid through the mortgage holder, the property owner could be in jeopardy of losing their home.  Meanwhile the state is holding and using this money, denying the property owner the ability to make payments in a timely manor.   We need reform, not rebates.

Summary of tax effects

Christie states he will reduce business, corporate taxes, property, and personal income taxes.  But he would not commit to by how much or when he expected it could be done.  He would retain property tax rebates.

“Chris Christie will appoint a “Taxpayer Advocate” in the Division of Purchase and Property.   The role of the “Taxpayer Advocate” will be to audit all government purchase orders to make sure they are for essential items.”

“Chris Christie proposes a State Constitutional Amendment to require a 2/3 majority of the State Legislature to impose any new tax, or to increase an existing tax. ”

Lonegan will eliminate taxes on businesses and corporations.  Would reduce property taxes and institute a flat personal income tax, decreasing over three years.  A flat tax would put NJ in line with the income taxes in our neighboring states and is simple to figure out (Income x .029) (Income x .025) (Income x .021).  He is against property tax rebates as a way to reduce our high property taxation stating, “My plan would cuts taxes for virtually every NJ taxpayer across the board”.

Christie claims that Lonegan’s flat personal income tax proposal will raise taxes on 70% of the people.  Lonegan disputes this claiming that the figures were based on tax filers and not taxpayers of which 3/4 of million have no income and file only to claim subsidies and rebates.  According to Lonegan, “Mr. Christie’s statement is based on flawed information”.

My view is that one must look at the net affects of an entire tax plan.  It is okay to dissect the segments, but it is the end result of the entire plan that counts.

Both candidates will be relying on business growth to help jumpstart the NJ economy.  The question is will some type of reduction in business taxes be enough, as suggested by Christie?  Or, is Lonegan’s plan of the elimination of business taxes the one that will inject the depressed business economy and quickly stimulate free market expansion?

Merkt feels that it a credible promise cannot be made to cut taxes because the legislature is Democratic ruled and Dick Cody would not support tax cuts.  The governor’s powers to appoint every top official and the Supreme Court, line item vetoes, reorganization and deregulation of state government, and executive orders that affect 7 out of 8 state employees are major tools of the governor (see NJ Constitution, Article V) apart from legislative involvement.  Rick believes that the political reality is a Republican Governor would be hard pressed to have legislative backing.

“ The time has come to put an end to this reckless attitude, and I will do so as New Jersey’s next Governor.  I will veto any tax hike proposal that passes the Legislature and use the line item veto to reduce state spending, so that higher state taxes aren’t needed.”

“The real trick to reduce taxes is to systematically shrink the size and cost of state government to a point that even the Legislature is compelled to admit to the public that it has more revenue than it needs. A Governor who enforces this restructuring and refuses to let the Legislature spend freely creates an environment in which state tax cuts become not only possible, but politically attractive to legislators.”

For an enlightenment on taxes read Paul Mulshine’s “On tax policy, New Jersey’s Republicans phones it in”.

For more information visit:
Steve Lonegan campaign site
Chris Christie campaign site
Rick Merkt campaign site

New Jersey Tax Review

(Signs available from Patriot Depot.)

If you need further reason to attend one of the many Tea Parties on April 15th, review the below New Jersey Senate Republicans press release.

GOVERNOR CORZINE & CHAIRMAN CRYAN: IF YOU THINK NEW JERSEY IS OVERTAXED WHY DID YOU SUPPORT THE FOLLOWING TAXES?

Senator Jennifer Beck would like Governor Corzine and Assemblyman Cryan to answer a simple question:

“If you really think taxes are too high, why have you supported billions of dollars of tax increases?”

Tax and Revenue Chart

The following chart lists the taxes and the corresponding amount of revenue that has been generated or is anticipated to be generated since Democrats took control of the Governor’s Office. Assemblyman Cryan voted for all the taxes below and Governor Corzine signed those listed for FY 2007 - FY2009.  The list has not been updated to include a recent $500 million toll increase on the Turnpike and Parkway imposed by the Governor, an approximate $400 million employer tax to support unemployment benefits, and taxes and fees the Governor has proposed on income, liquor, wine, and motor vehicle transactions.

FY 2009

·                    Payroll Tax for Paid Family Leave (P.L. 2008, c. 17, formerly A-873 – Albano/ Oliver/Greenstein) – Beginning January 1, 2009, all employees began paying a portion of their income into an account to be used for family leave benefits.  Beginning July 1, 2009 businesses will be forced to expend additional resources to hire new or temporary employees to replace those taking paid family leave.

$                   Transitional Energy Facilities Assessment  Reinstatement and Extension (P.L. 2004, c. 43, formerly A-3102 - Caraballo/Lesniak; P.L. 2006, c. 40, formerly A-4709 – Caraballo/B. Smith); and P.L. 2008, c. 32, formerly A-2807 – Quigley/Lesniak) - The Transitional Facilities Energy Assessment (TEFA) was scheduled to begin to phase-out as of January 1, 2009.  This legislation freezes the assessment at the 2001 rate with the phase-out not occurring until at least Fiscal Year 2014.

$                   Tax on Non-Residential and Residential Development – (P.L. 2008, c. 46, formerly  A-500 – Roberts/Watson Coleman/Green) -       This law requires the imposition of a fee (tax) on non-residential development and allows municipalities to impose development fees on residential property.  The tax to be imposed on all construction resulting in non-residential development, and for construction permits affecting non-residential property, is to be set at a rate equal to 2.5% of (1) the equalized assessed value of the land and improvements for all new non-residential construction on an unimproved lot or lots; or (2) the increase in equalized assessed value, of the additions to existing structures to be used for non-residential purposes.  In addition, any municipality that has adopted a municipal development fee ordinance may, with the approval of the Council on Affordable Housing (COAH), impose and collect development fees from developers of residential property.

FY 2008

$                   Television and Electronics Tax (P.L. 2007, c. 347, formerly A-3527 – Gusciora/Barnes/McKeon) – This legislation provides for the collection and recycling of used televisions by imposing an annual $5,000 registration fee on television manufacturers, starting on January 1, 2009.  The tax revenue will be deposited into a fund, administered by the DEP, and used to provide funding for a State used television recycling and management program, including the administrative expenses and to make payments to authorized recyclers.

$                   Litter Tax (P.L. 2007, c. 311, formerly A-1886 – McKeon/Gusciora) – This legislation imposes a recycling tax on solid waste generation.  The litter/recycling tax will be levied on (1) the owner or operator of every solid waste facility at the rate of $3 per ton on all solid waste accepted for disposal or transfer at the solid waste facility; and (2) on solid waste collectors at the rate of $3 per ton on all solid waste collected for transshipment or direct transportation to an out-of-state disposal site.  The tax will be considered a “pass-through” cost to the solid waste facility owner or operator and solid waste collector, meaning the fees or surcharges ultimately will be paid by the solid waste generators utilizing the facilities or services.

·                    Parking Tax (P.L. 2007, c. 296, formerly S-2891 – Rice/Caraballo) - This legislation authorizes the imposition of a special event parking tax surcharge to be assessed in addition to any other parking tax currently imposed.  The special event parking tax surcharge is 7% of the fee for the parking, garaging, or storing of motor vehicles for special events held in the municipality during weekday evenings, beginning at 6:00 p.m. or later, and held at any time on Saturdays, Sundays, and holidays.  This tax was authorized to provide revenue to the City of Newark to pay for costs associated with the operation of the new arena.

·                    Admissions Tax (P.L. 2007, c. 302, formerly S-2971 – Rice/Caraballo) – This legislation allows a municipality to impose a 5% surcharge on admission charges at places of amusement at which admission charges are regularly paid and which contain fixed seats or bleacher capacity for not less than 10,000 patrons.  The surcharge cannot be imposed on major places of amusement owned by the State or an independent State authority, motion picture theaters, or amusement parks.  While other towns may fall under the provisions of this law, the tax was authorized to provide revenue to the City of Newark to pay for costs associated with the operation of the new arena.

·                    Emissions Tax (P.L. 2007, c. 340, formerly A-4559 – Chivukula/McKeon/ Stender) – This legislation places a tax on those New Jersey businesses that emit carbon dioxide.  This emission tax will raise millions of dollars to create funds in EDA, DEP and the BPU to fund “energy efficiency and conservation programs.”  The legislation will require public electric and gas utilities to raise rates on electric and gas bills for residential, commercial, institutional, and industrial customers to cover the costs of implementing energy efficiency and conservation programs.

·                    Explosive (Black Powder) Tax (P.L. 2007, c. 274, formerly S-2055 – Sweeney/Burzichelli) – Legislation increased the taxes paid by those who manufacture, sell, transport, sell, store, or use explosives.  Included in bill’s provisions was the doubling of the tax on black powder (in amounts in excess of 5 pounds but not in excess of 100 pounds) which is used by private persons for the hand loading of small arms ammunition and which is not for resale.

FY 2007

·                    Sales Tax Rate Increase (P.L. 2006, c. 44, formerly A-4901 – Payne/Cruz-Perez/Kenny) -  As part of his budget message, Governor Corzine proposed increasing the sales tax rate from 6% to 7% and expanding the sales tax to cover previously untaxed items.  The Governor chose to raise this tax because it was the only one of the major taxes that had not been increased during the previous five years, and raising taxes is an easier alternative for Democrats than cutting spending.  The sales tax is one of the most regressive taxes and its increase has caused Democrats to make up for it by proposing to provide tax relief to the poorest New Jerseyans (through an Earned Income Tax Credit increase).

·                    Sales Tax Expansion (P.L. 2006, c. 44, formerly A-4901 – Payne/Cruz-Perez/Kenny) -  In conjunction with the sales tax rate increase, the sales tax base was expanded to impose the 7% levy on previously untaxed goods and services.  Those items newly taxed include digital property and pre-written software; shipping and handling; dry cleaning of non-clothing items; landscaping; self-storage rental units; tanning and tattoo services; massages; information services; limousine services; flooring and carpet installation; parking, storing and garaging a motor vehicle; non-subscription magazines and periodicals; investigative and security services; and membership fees.  Membership fees include charges by health clubs, gyms, golf clubs, and YMCAs.

$                   Health Care Tax (P.L. 2006, c. 43, formerly A-4716 – Pou/Watson Coleman/Kenny) - This legislation increased the tax on HMOs and their members by 100%; the  tax of 1% on net written premiums was increased to 2%.

·                    Tax on the Sale of Commercial Property (P.L. 2006, c. 33, formerly A-4701 – McKeon/Epps/Bryant) - This legislation imposes a tax on the sale of commercial property valued in excess of $1 million.  The tax is set at 1% of the value of the property and is paid by the buyer.

·                    Cigarette Tax (P.L. 2006, c. 37, formerly A-4705 – Gusciora/Epps/Lesniak) - This legislation increased the cigarette tax for the fourth time in five years.  This increase raised the tax by 17.5¢ per pack, bringing the total state cigarette tax to $2.575 per pack. The legislation also changed the method of taxing moist snuff to a weight-based tax.

·                    Tax on Motor Vehicle Purchases  (P.L. 2006, c. 39, formerly A-4707 – Greenwald/ Lesniak) - This legislation imposes a tax on the purchase of any new passenger vehicle with a sales price of $45,000 or more, or that gets less than 19 miles per gallon.   The tax is set at 0.4% of the sales or lease price.  For a vehicle selling for $45,000, this means an additional tax of $180.

·                    Car Rental Tax (P.L. 2006, c. 42, formerly A-4715 – Burzichelli/Epps/Bryant) - This legislation increased the tax on motor vehicle rentals from $2 to $5 per day.

$                   Transitional Energy Facilities Assessment  Reinstatement and Extension (P.L. 2004, c. 43, formerly A-3102 - Caraballo/Lesniak and P.L. 2006, c. 40, formerly A-4709 – Caraballo/Bob Smith) - The Transitional Facilities Energy Assessment (TEFA) was scheduled to begin to phase-out as of January 1, 2007.  The phase-out was further delayed until December 31, 2010.

·                    Fur Clothing Tax  (P.L. 2006, c. 41, formerly A-4714 – Caraballo/Vitale) - This legislation imposes a 6% gross receipts tax on the retail sale of fur clothing.

·                    Corporation Business Tax Surcharge (P.L. 2006, c. 38, formerly A-4706 – Roberts/Watson Coleman/Kenny) - This legislation imposes a new tax on business.  In addition to corporation business tax liability, a business is now required to pay a surcharge equal to 4% of the amount of the corporation’s tax liability.  The surcharge is to be assessed for each corporation tax year occurring during fiscal years 2007, 2008 and 2009.

·                    Corporation Business Tax Minimum Payment (P.L. 2006, c. 38, formerly A-4706 – Roberts/Watson Coleman/Kenny) - This legislation increased the corporation business tax minimum payment for taxpayers with New Jersey gross receipts of $100,000 or more.  The new minimum tax ranges from $500 to $2,000.

·                    Nuclear Electric Generating Facilities (P.L. 2006, c. 35, formerly A-4703 – Quigley/Cohen/Bryant) - This legislation authorizes the State Treasurer to impose  an annual tax/assessment (above and beyond the assessment made under P.L.1981, c.302) against the operator of each nuclear electric generating facility located in New Jersey. The total of the assessments must reflect the actual costs incurred by the State in providing supplemental security services at each nuclear facility.

·                    Motor Vehicle Registration Fee Increase (P.L. 2005, c. 311), formerly A-4584 – Sires/Quigley/Greenwald/Kenny) – This bill imposes a $4 motor vehicle registration surcharge.  Of this amount, $3 is intended to purchase and maintain the state’s helicopter fleet.  The remaining $1 is statutorily directed to new state police classes.  For FY 2007, all of the new surcharge revenue was redirected to balance the budget.  In FY 2008, a portion of this revenue was again redirected.  Instead of using the funds for their intended purpose, surcharge collections have been used to buy state police vehicles and pay for existing state police salaries.

FY 2006

$                   Eliminates Gross Income Tax Exclusion for Pension Income (P.L. 2005, c. 130, formerly A-4404 - Sires) - This legislation eliminates the ability of certain senior citizens to exclude their pension and retirement income from their gross income for the purpose of paying New Jersey state gross income taxes.  Taxpayers with an income of $100,000 or more no longer will be able to exclude their pension and retirement income.  Democrats call the individuals impacted by this legislation Ahigh income taxpayers.@

$                   Increases the Tax on Horizon Blue Cross Blue Shield of New Jersey and the Premiums of its Policy Holders (P.L. 2005, c. 128, formerly A-4401 - Roberts/Cohen/Buono) - This legislation establishes a new and higher tax to be paid solely by Horizon Blue Cross Blue Shield of New Jersey.  Horizon is required to pay an insurance premium tax on all premiums (previously only Aexperience rated,@ or group insurance premiums were subject to the insurance premium tax while individual and small group insurance premiums were not).  In addition, the bill excludes Horizon from the  maximum tax rule which caps taxable premiums at 12.5% of total premiums for any company whose taxable premiums in New Jersey exceed 12.5% of total worldwide taxable premiums.  Some believe that Horizon was targeted for one of several reasons including: (1) the company=s decision to not go public; (2) the inability of the Legislature to grab a portion of the company=s surplus;  (3) its position in labor negotiations with Cooper and Hackensack Hospitals; or (4) all of the above.

$                   Health Care Tax (makes permanent) (P.L. 2005, c. 129, formerly A-4402 - Cryan/ Buono) - This bill converts the one-time, special interim assessment of one percent on net written premiums received by health maintenance organizations (HMOs), enacted as P.L.2004, c.49 (C.26:2J-45 et seq.), to an annual assessment to support charity care.

$                   Tax on Builders (P.L. 2005, c. 131, formerly A-4405 - Cryan/Bryant) - Democrats in the Assembly wanted to take balances in the New Home Warranty Fund.  However, the New Home Warranty Fund statute provides that balances in the Fund may only be used to provide buyers of new homes with insurance-backed warranty protection in the event that certain standards are not met.  In the event funds are spent for other purposes, the obligation of builders to contribute to the fund is suspended until the funds are replenished.  This legislation provides that builders will continue to contribute to the Fund (be taxed) even though balances are being used to pay for the Democrats’ spending.

$                   Decouple the Corporation Business Tax and Gross Income Tax from the Federal Deduction of Qualified Production Activities Income (P.L. 2005, c. 127, formerly A-4294 - Cryan/Vas/Bryant) - This legislation increases taxes for certain New Jersey businesses by decoupling New Jersey=s Corporation Business Tax (CBT) and Gross Income Tax (GIT) from the federal manufacturer tax deduction.

FY 2005

$                   Income Tax Rate Increase (P.L. 2004, c. 40, formerly A-100 - Sires/Cryan/Green/ Kenny) - This legislation implements former Governor McGreevey=s proposal to increase gross income tax rates in order to provide higher property tax rebate checks for some New Jersey residents. It establishes a new marginal tax rate of 8.97% on the amount of taxable income in excess of $500,000.  In order to generate enough revenue to cover the cost associated with the distribution of homestead rebates at increased levels, the change to the gross income tax rate schedule was made retroactive to January 1, 2004.

$                   Telecommunications (Cell Phone/Land Line) Tax (P.L. 2004, c. 48, formerly A-3112 - Caraballo/Bryant) - This legislation imposes a per month, per phone number tax on telecommunications services.  Specifically, a tax of $0.90 is to be assessed on each bill (1) charged by a mobile telecommunications company for each Avoice-grade access@ service number as part of mobile telecommunications service provided to a customer or for the customer=s home service provider and provided to a customer with a place of primary use in New Jersey, and (2) charged by a telecommunications exchange company for each telephone voice grade access service line provided as part of that telephone exchange service.

$                   Cigarette Tax (P.L. 2004, c. 67, formerly A-3113 - Weinberg/Lesniak) - This legislation increased the cigarette tax for the third time in as many years.  This increase raised the tax by $0.35 per pack, bringing the total state cigarette tax to $2.40 per pack.  The increase in conjunction with the motor vehicle surcharge fee (see below) is being used to securitize approximately $1.9 billion of deficit bonds to balance the FY 2005 budget.

$                   Motor Vehicle Registration Tax (P.L. 2004, c. 64, formerly A-3107 - Sires/Bryant) -  This legislation quadruples the cost of a motor vehicle registration by requiring the purchaser of a new passenger automobile to  pre-purchase a four-year registration.  Full payment of this registration tax is required upon the initial registration.

$                   New Tire Purchase Tax (P.L. 2004, c. 46, formerly A-3106 - Quigley/Kenny) - This legislation imposes a tax of $1.50 for each new motor vehicle tire sold at retail within the State.  The tax is paid by the purchaser and is to be assessed on all new tire purchases, including the tires sold as a component part of a new motor vehicle or whenever new tires are installed on a used motor vehicle prior to that vehicle being offered for sale.

$                   Realty Transfer Tax (P.L. 2004, c. 66, formerly A-3115 - Cryan/Kenny) - For the second time in as many years, the Democrats increased the tax on certain realty transfers.  The change translates to a $70 million increase in home costs to be paid by the seller.

$                   Tax on the Sales of Homes Valued in Excess of $1 million (P.L. 2004, c. 66, formerly A-3115 - Cryan/Kenny) - A new tax has been established on the purchase of residential property priced over $1 million.  This change represents a $29 million increase in home costs to be paid by the purchaser.

$                   Imposition of Unsafe Driving Surcharges (P.L. 2004, c. 69, formerly A-3114 - Barnes/Bryant) - This legislation creates a new surcharge of $250 for unsafe driving.  This is in addition to other fines and surcharges previously established for unsafe driving.  The Democrats used this increase in conjunction with the increase in the cigarette tax (see above) to securitize approximately $1.9 billion in deficit bonds to balance the FY 2005 budget.

$                   Deductibility of Net Operating Losses (P.L. 2004, c. 47, formerly A-3110 - Watson Coleman/Johnson/Kenny) - This tax change takes away the ability of a business to fully deduct net operating losses.  Specifically, the legislation limits to 50% the application of net operating loss (NOL) deductions under the corporation business tax for privilege periods beginning in calendar years 2004 and 2005.  Full deductibility was to have begun for the 2004 tax year.  Instead it expired as of December 31, 2007.  (Net operating loss is a tax accounting concept; if a taxpayer has more business expense than business income in a tax year, the taxpayer has a net operating loss for that year.)

$                   Disallowance of Depreciation Deduction (P.L. 2004, c. 65, formerly A-3111 - Sires/Cohen/Bryant) - This tax change takes away from New Jersey businesses certain of the tax relief benefits included in the federal Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA).  The specific measure being altered deals with the ability of a business to deduct from their taxes an amount for the depreciation of equipment and machinery.

$                   Transitional Energy Facilities Assessment  Reinstatement and Extension (P.L. 2004, c. 43, formerly A-3102 - Caraballo/Lesniak and P.L. 2006, c. 40, formerly A-4709 – Caraballo/Bob Smith) - The Transitional Facilities Energy Assessment (TEFA) was scheduled to begin to phase-out as of January 1, 2005.  The 2004 legislation froze the assessment at the 2001 rate and pushed back the phase-out date.  In 2006, the phase-out was further delayed and now the tax will not sunset until at least December 31, 2010.

$                   Hazardous Discharge Site Cleanup Fund/New Jersey Spill Compensation Fund Tax (P.L. 2004, c. 50, formerly A-3117 - McKeon/Bob Smith) - This legislation increases the tax imposed for the transfers of hazardous substances.  Specifically the tax increases from $0.015 to $0.023 per barrel for petroleum or petroleum products, precious metals, elemental phosphorus, or in certain circumstances, antimony or antimony trioxide sold for use in the manufacture or for the purpose of fire retardants.  For other hazardous substances, the legislation increases the tax rate to the greater of $0.023 per barrel or 1.53% of the fair market value of the product.

$                   Billboard Tax (P.L. 2004, c. 42, formerly A-3101 - Mayer/R. Smith/ Madden/Sweeney) - This legislation extends the sales tax on billboard advertising space.  In 2003, the Legislature imposed a fee of 6% on the gross amounts collected by a retail seller for billboard advertising.  Beginning on July 1, 2006 through June 30, 2007, the tax is reduced to 4%, and on July 1, 2007 the tax is to be discontinued.

$                   Air Emissions Tax (P.L. 2004, c. 51, formerly A-3118 - Greenwald/Bob Smith) - This legislation creates a new tax to be assessed on the owner or operator of any facility that emits certain air toxics.  The surcharge is based on the annual emissions of each Category 2, Category 3 and Category 4 toxic substance as reported in the release and pollution prevention report for that facility.

$                   Tax on Medical Care (Ambulatory Care) (P.L. 2004, c.54, formerly A-3127 - Diegnan/Bryant) - This legislation establishes an annual assessment on the gross receipts of certain licensed ambulatory care facilities.  Specifically, a facility with $300,000 or more in gross receipts will be taxed at a rate of 3.5% of gross receipts or $200,000, whichever is less.  A facility with annual gross receipts less than $300,000 will not have to pay an assessment. For FY 2006, the rate was recalculated to include calendar year 2004 data. Beginning in 2007, a facility=s uniform gross receipts assessment will be based on the facility=s most recent annual report to the DHSS. No facility will be required to pay more than $200,000.

$                   Health Care Tax/HMO Assessment (P.L. 2004, c. 49, formerly A-3116 - Wisniewski/Buono) - This legislation establishes a special interim assessment on health maintenance organizations (HMOs). This assessment translates to $7 per client and a $56 million tax on the health care industry.

$                   Sales Tax on Cosmetic Procedures (P.L. 2004, c. 53, formerly A-3125 - Cryan/Bryant) - This legislation imposes a 6% gross receipts tax on certain cosmetic medical procedures. ACosmetic medical procedures@ are defined as any medical procedure performed on an individual which is directed at improving the individual=s appearance, and which does not meaningfully promote the proper function of the body or prevent or treat illness or disease.  The legislation defines cosmetic medical procedure as cosmetic surgery, hair transplants, cosmetic injections, cosmetic soft tissue fillers, dermabrasion and chemical peel, laser hair removal, laser skin resurfacing, laser treatment of leg veins, sclerotherapy, and cosmetic dentistry.

 FY 2004

$                   Hotel/Motel/Bed and Breakfast Occupancy Tax (P.L. 2003, c. 114, formerly A-3710 - Roberts/Impreveduto/Bryant) - This legislation imposes a new fee on hotel and motel occupancies.  The fee is to be paid by the guests of the hotel or motel.  From August 1, 2003 through June 30, 2004, the new tax was set at 7%, with the total amount going to the General Fund. During this period a local option tax of 1% could be imposed on Atransient rentals.@

Beginning on July 1, 2004, the statewide tax dropped to 5% and the local option tax may increase to 3%.

This tax was intended to raise $140 million for the State during FY 2004, with a portion of the tax revenue used to restore cuts made to the programs that fund arts, history and cultural grants.  The amount of revenue generated by the tax increase now depends on the number of municipalities which opt to impose the local option tax.  Revenue available to the state will decline.

$                   Cigarette Tax (P.L. 2003, c. 115, formerly A-3711 – Diegnan/Lesniak) - The tax on a pack of cigarettes was increased by $0.55 per pack.  This is on top of the $0.70 tax increase imposed during FY 2003.  This brought the total state tax on a pack of cigarettes to $2.05 per pack.

$                   Casino Taxes  (P.L. 2003, c. 116, formerly A-3713 - Greenwald) - This legislation raises  revenue from new and expanded taxes on casinos.  Specifically, the legislation imposes a 7.5% tax on the annual adjusted net income of a licensed casino; a 4.25% tax on the value of complimentary rooms, food, beverages or entertainment  provided by a casino; a tax of 8% on casino service industry multi-casino progressive slot machine revenue; and a $3 per day charge on each hotel room in a casino hotel facility as well as a $1 increase, from $2 to $3, in the casino hotel parking fee.  The deduction that a casino licensee was previously  permitted to take for uncollectible gaming debt, when calculating gross revenue, is eliminated.  $90 million in additional revenue generated from these tax changes was directed to the Casino Revenue Fund.

·                    Realty Transfer Tax (P.L. 2003, c. 113, formerly A-3709 – Cryan/Kenny) - This legislation increases the realty transfer fee for each conveyance or transfer of property.  The seller is required to pay a supplemental fee based on the sale price of the property.  The legislation is intended to generate $62 million in additional revenue for the State and approximately $22 million in additional revenue for the counties.

$                   Billboard Tax (P.L. 2003, c. 124, formerly A-3714 – Gusciora/Bryant/Sweeney) - In addition to Gov. McGreevey’s tax increase proposals, the Democrat-controlled Legislature thought it would be appropriate to impose a sales tax on billboard advertising.  This legislation imposes a tax of 6% on the gross amounts collected by a retail seller of billboard advertising.

$                   Fees (P.L. 2003, c. 117, formerly A-3719 – Caraballo/Codey) - A total of $35 million in new revenue is being generated through instituting or raising various fees, including a fee for licenses issued by the Real Estate Commission ($4.5 million), construction code fees under the Uniform Construction Code ($2.7 million), costs imposed on employers under the Right to Know Act ($2.1 million), license and permit fees imposed under the Alcoholic Beverage Control Act ($2.0 million), unemployment insurance fines ($2.5 million) and fees imposed for non-criminal background checks ($1.7 million).  New fees also have been imposed on limousine owners, and the fee for filing for a divorce has been increased.

$                   Nursing Home Assessment (P.L. 2003, c. 105, formerly A-3686 - Watson Coleman/Conaway/Kenny and P.L. 2004, c. 41, formerly A-3051 – Conaway/Watson Coleman/Kenny) - An assessment on nursing home facilities based on the number of non-Medicare patient days also was levied in FY 2004.  The assessment was deemed  a Ahealth care-related tax@ which makes the amount collected eligible to be matched by federal Medicaid reimbursement.  The FY 2004 budget skimmed $51.5 million from the additional Medicaid reimbursements.  Subsequent budgets also have skimmed a portion of this revenue.

 FY 2003

$                   Estate Tax - P.L. 2002, c. 31 (formerly A-2302 - Watson Coleman/Gusciora/Turner) -  established a new tax on estates by providing that New Jersey estate taxes are to be computed as though the terms of the federal estate tax that applied on December 31, 2001, including those provisions governing liability for the tax and allowance of a state legacy tax credit, continue to apply.  P.L. 2002, c. 31 also repealed R.S. 54:38-8 which would have voided the New Jersey estate tax in the event of the repeal of the federal estate tax or the federal credit for state legacy taxes.

$                   Corporation Business Tax - P.L. 2002, c. 40 (formerly A-2501 - Sires/Roberts/Kenny) - restructured the Corporation Business Tax by making fundamental changes in the way New Jersey taxes business.  This legislation is the result of Governor McGreevey=s mandate to raise an additional $1 billion from the business community.

$                   Cigarette Tax - P.L. 2002, c. 33 (formerly A-2504 - Weinberg) increased the tax on the sale of cigarettes by $0.70 per pack (from $0.80 to $1.50 per pack) with the anticipation of an additional  $240 million of revenue for the state. The increased revenue is statutorily dedicated for health programs ($200 million) and to fund anti-smoking initiatives ($30 million in FY 2003 and FY 2004, $40 million in FY 2005, and $45 million in FY 2006).  However, the language dedicating $30-$40 million for tobacco cessation programs has been superseded by language included in the FY 2004 and FY 2005 budgets.  Only $10 million was  provided in FY 2004 and $11 million in FY 2005.

$                   Fee Increases - P.L. 2002, c. 34 (formerly A-2506 - Cohen/Codey) - $129 million in additional state revenue was anticipated to be generated through this Omnibus Fee bill.  The legislation established, increased and modified fees and penalties.  It increased fees and penalties in the following areas: agriculture, motor vehicles, bulk purchase of drivers= abstracts by insurance and credit companies, commercial truck/tractor registration fees, open competitive and promotional examinations, corporate filings, health maintenance organizations, the Department of Environmental Protection, notaries public and the Judiciary.  The fee bill also increased municipal revenue by $1.15 million (50% of the estimated revenue from the additional $100 surcharge on persons convicted of operating a motor vehicle while under the influence of drugs or alcohol).

New Jersey Senate Republicans

Steve Lonegan-“A breath of fresh air”

A great turn out was seen in Hunterdon County January 21st where Gubernatorial candidate Steve Lonegan invigorated the crowd with hope that New Jersey could be turned around and once again become a premier state for citizens to live and work.   The crowd was silent, intensely absorbing what was presented, only broken by numerous applause, and a few chuckles.  Lonegan spoke about problems in our state, injecting interesting historical information, and presenting his detailed solutions.  He answered an important question in his opening statement.

“The first thing to ask a candidate who is running for office is; why are you running.”  I’m running to be Governor State of NJ to relieve every taxpayer of the burden of high taxes and big government so that every one of us can rise to our best possible potential.  “That is the foundation of the American Dream.  The growth of government in this state is undermining our culture, it’s undermining our prosperity, and our ability to turn over to our children that American Dream that we often take for granted.”

His studies of many government transitions provide a basis of understanding that the general population is slower to grasp, resulting in many considering his ideas radical.  This outlook is changing as many of us begin to understand how it is the current administration that is deviating from our Constitution, and themselves radically changing the essence of the words of our Founding Fathers.

There are three main issues that will be the core of Lonegan’s campaign for governor.  He discussed these issues in detail.  You will find out from my synopsis of the evening that Lonegan’s understanding of government systems and the issues facing our state, diversity of experience  and record of successfully solving problems comparable to those we must now face, and his detailed plans to address the issues, make him the best person to defeat Jon Corzine and lead our state into the future.

Cut taxes by cutting the size of government by no less than 20%.

By this statement Lonegan means cut the actual size of the state structure and authority.  This is different than what Corzine is presenting as ‘cuts’ in that it does not postpone payments such as pensions, or pass costs down to towns and ultimately taxpayers.

He went on to say that today’s state budget is $33 billion and has often grown by 4-5 times the rate of inflation.  It is the fastest growing budget in America.  Lonegan went back to the 1995 state budget and added from there.  The 1995 budget was $14.1 billion; if you adjust that for inflation, and add 1% just to be nice, the current budget would be less than $25 billion.  To make matters worse, he adds that at the same time our debt has gone from $7 billion to $40 billion.  As a reference in comparison of NJ’s enormous budget growth is our neighboring state of Pennsylvania.  The landmass in PA is six times that of NJ and the population is 40% greater, but it has a budget that is $6 billion less than NJ.

Lonegan cited the Department of Environmental Protection (DEP) as an example of runaway bureaucracy.  This department employs over 3,400, which averages out to 6 for every town in the state.  He describes them as a, “Fine now ask questions later organization.”  As an example he referred to Lavalette Beach who was ordered to make their beach handicapped accessible by the federal government.  After compliance and great expense the DEP declared that they were in violation of the state rules and the fine would be $60,000.  Lavalette will now spend thousands in legal defense.

Council on Affordable Housing (COAH)

The NJ Supreme Court took control of our housing policies and mandated centralized control over our towns.  The Court gave control of our housing policies to a group of faceless bureaucrats on the Council of Affordable Housing (COAH).  NJ is the only state in the country that has this program.  The third round COAH rules mandate that well over 100,000 taxpayer subsidized housing units be built across the state.  Lonegan views this mandate as, “a model of what they call progressive government” and, “We are making this a magnet state for welfare.”  He holds firm on his convictions against COAH.

“I will not extend the time deadline to comply with COAH, we’re not going to change the numbers, what we are going to do is overturn COAH completely and put an end to it once and for all.  We will put new people on the COAH board, and take away their budget and their pencils and paper.  Put a question on the ballot and let the voters decide.”

Education

In Mayor Steve Lonegan’s book Putting Taxpayers First there appears a quote from Albert Schanker, President, American Federation of Teachers, “When school children start paying union dues, that’s when I’ll start representing the interests of school children”.

Education is the #1 driving force behind high taxes.  Fifteen years ago the NJ Supreme Court decided that school funding in the poorest districts must match the highest districts.  The Abbott decision required funding for 33 districts in NJ. These districts are now the most expensive in America, approaching $30,000 per student in Camden today, and over $20,000 in other districts.  I interject here that if corporate and other donations are added to this figure it could be significantly higher.  Years of pouring billions into the Abbott Districts and they only produce less than a mediocre education, with only 35% passing the high school proficiency test. The site Excellent Education for Everyone has some good reading on this subject.

In a further enhancement to Schanker’s quote Lonegan adds, “Education is now about bureaucracy, about the NJEA teachers union, it is no longer about the children.”  The Lonegan solution, give the same funding to all schools, expect a quality education and, “If they cannot they will be required to give a voucher [to the parents of that child] so [the child] can go to a school of their [parent’s] choice.”  This will drive competition and innovation and private schools will reopen, breaking the political hold of the teachers union.  There are plenty of teachers that do not agree with the union that they are required to join.  The tenure system allows inferior teachers to stay in their jobs, and this infuriates good teachers every day.

This is Lonegan’s response to the question about merging school districts.

“Stockton is one of the smallest school systems in state, one of the lowest per student costs and the highest test scores.  The driving force of costs behind increased school spending is not because of little school districts it is because of state mandates, teacher’s contracts that school boards are unable to negotiate fairly.  The minute school boards start to talk about givebacks, the union sends in a swat team of the best lawyers in the state to pound you into the ground.”

Lonegan welcomed numerous other questions from the audience. 

When questioned about the issues of eminent domain and the Highlands Act he described the original intent of “pursuit of happiness” as including the right to own property.  The Highlands Act decreased property value without compensation.  He would appoint others to Highlands Council until it is overturned.  The original intent of eminent domain was for schools and roads.  Some of the worst eminent domain cases have been seen at local levels.  As Mayor of Bogota he placed a question on the ballot that guaranteed the town would not take property for private development.  The question passed with 95% of vote.

Prevailing wages and project labor agreements is perhaps the easiest to reverse.  Former Governor James McGreevey signed Executive Order #1, driving up cost by 30% and money is being borrowed to meet the extra costs.  “It was implemented by executive order and can be undone by executive order”.

There was a question about the Transportation Trust Fund (TTF).   Here is a brief on Lonegan’s answer.  The fund started when Tom Kane was governor and all the gas tax revenue was to fund improvements.  Money has been diverted to other projects like $2 billion to the infamous Camden/Trenton light rail that has been described as the biggest economic boondoggle since the Hindenburg.  Lonegan would eliminate TTF and have a simple line item for gas tax revenue versus road improvements, the way it used to be.  All the revenue from fund now only goes to debt payments.

Another question was concerning the current state pension system.  Former Governor Christie Wittman tapped into the pension plan and lot more money has been taken since then.  Lonegan brings up the $180 million to shore up Lehman Brothers and $250 million taken as part of the governor’s ‘stimulus’.  He adds, the pension system has been poorly managed, and has been a political slush fund for the last 8 years.  He would work to begin the process of new government employees going to 401Ks.

Lonegan believes it would be good to make NJ a right to work state.  Beyond that he is concerned that we have become a card check state.  This means unions can walk into any business and the employee has to check off on a card in front of that representative choosing whether they want to be a union member or not.  That takes away the secret ballot and opens the door to intimidation by union representatives.

When asked about Republican opponent Chris Christie Lonegan commended him for doing a fine job of US attorney, and that Christie is a lawyer.  Steve went on to give his own credentials of executive experience as owner of a successful manufacturing and retail business in state for 25 years.  He was also the Mayor of Bogota for 12 years.  Lonegan believes his experience, and history of successfully dealing with the issues facing our state, as well as always standing on the side of taxpayers, is what is needed to lead our state at this time.

Many people were most curious and concerned about how the Republican Party would fair in the November election.

“We’re going to take the Republican Party in a whole new direction.  It’s not just about winning.  It’s about governing in a historic way that will turn the state around.  This will be the most historic election in the country this year, everything we believe in will be tested right here in NJ.  We need to stand up for our principles.  This is a classic battle between conservative free market principles and big government liberals”.

Rick Shafton, celebrated pollster, and a self proclaimed political junkie gave some interesting statistics on the chances of a conservative like Steve Lonegan wining in NJ.  Shafton estimates that 20% of liberals will vote for Lonegan.  He noted that Lonegan has gone up against Democrats time and time again.  In Bogota, a town that voted 64% Obama, 66% Frank Launtenberg, Lonegan won 3 times by double-digit margins.  He attributes this to the solid message of Lonegan.  He described Lonegan as Jon Corzine’s total opposite.

One attendee described Steve Lonegan as “a breath of fresh air”.  There was discussion of state mandates without state pay and ordinances that are adding to bureaucracy every day.  Mayors and councils have been relegated to being functionaries of the state by virtue of the enormous time spent on complying with state mandates and regulations.  This leaves little time to actually govern the town.  Lonegan wants the control of local governments returned to the towns and the system decentralized.  This will return the control to “of the people, by the people”.

“They [liberals] worship at the altar of big government.  I despise big government.  I think it is an obstacle to economic growth. I believe the strength of NJ is in its’ small towns.  I will never go out and mandate that towns have to merge.  Small local government is the heart of conservatism.”

I have followed Steve Lonegan for a number of years and he is a solid candidate.

Over time I have been amazed by his leadership abilities as Executive Director for Americans for Prosperity NJ.  He administered a grassroots movement to educate us about state borrowing and as a result two ballot questions were defeated.  Lonegan also led the charge to defeat Corzine’s 800% toll hike.  Remember the tens of thousands of “VOTE NO ON ALL BALLOT QUESTIONS” and “NO TOLLS FOR BUDGET HOLES” signs?

As three term mayor of Bogota in Bergen County Lonegan kept taxes below the rate of inflation.  This shows a proven track record, giving credence that his methodology is successful.  It also provided him with the experience and knowledge of how governments interact and operate.

Myself as a child growing up in the sixties I can relate to his historical account of what our family was like during that decade.  Memories of my grandparents discussing why they come to this country match Lonegan’s statement, “They came to seek freedom not free things.”  They came to work hard and seize the opportunities our country afforded to strive for a good life for their family, and yes most moms stayed home to raise the family.   Dad’s salary was enough to comfortably support most households.

Lonegan’s recount of the implementation of sales taxes and income taxes sparks my memory of this time.  Although I will admit that as a young teenager with my lack of financial understanding and caring, the family discussion was ‘background noise’.  So here’s my paraphrase of Lonegan’s history of these taxes.  Until 1965 NJ was one of the 3 lowest tax states in America and we were the number one state to operate a business.  Now we are the 50th worst state in which to do business. We also hold the title of worst taxes.     NJ government continues to grow and has been the driving force to drive down our state’s economy.   We have lost two congressional districts since 1972 when there were fifteen.  Now because of outward migration of our citizens we are on the verge of losing another.

Many years as a successful owner of a custom cabinet business jobs gave Lonegan a ‘bird’s eye’ view of manufacturing, retailing, and employing in NJ.

To top it all off, Steve Lonegan has the heart and the guts.  He sues against state borrowing done without voter approval, and he gets arrested defending the taxpayers.  Lonegan holds tight to his convictions even under pressing conditions.
While Mayor of Bogota the town passed a resolution refusing to comply with state affirmative action guidelines.  They based the decision on the state papers being in violation of their principles of not judging people by the color of their skin, but on the content of their character.  The town council voted 6-0.  They have held their resolve for years even with threats by the state of legal action, including fine and imprisonment.  In Lonegan’s own words, “It is an offensive regulation.”

Craig O’Brian field director for the campaign was encouraged to see such a good turnout in Hunterdon County.  The goal is to have a leader for every county, and a leader for every town.  He suggested that anyone with the goal to make government more efficient and streamlined join the crusade.  More information can be found on the campaign web site.

Energized by what Republican candidate Steve Lonegan presented, bumper stickers that read, “Dump Corzine-Elect Lonegan” quickly disappeared.  Taxpayers who walked in as skeptics left full of hope. Many of the attendees took literature that was available, signed up to assist in the campaign, and signed a petition to nominate Steve Lonegan for the coming primary election.

Tax oppressive New Jersey

This morning the non-profit, non-partisan Tax Foundation released their 2009 State Business Tax Climate Index report.  The organization was founded in 1937.  They rate federal, state, and local tax policies.

Out of our 50 states, New Jersey came in #50.  NJ is declared the worst state in the US for business for a second year in a row.  The Tax Foundation hopes that policy makers will use their information as a tool to help improve the tax environment and create a more competitive environment.  For individuals the index can empower citizens to question the tax system and suggest improvements.   112 variables are used to measure taxes and are broken down into the five major tax categories.

“The Index ranks states based on the taxes that matter most to businesses and business investment: corporate tax, individual income tax, sales tax, unemployment insurance tax and property tax.  The states are scored on these taxes, and the scores are weighed based on the relative importance of the tax to economic activity.”

Neighboring Pennsylvania, ranking 28th, is in a good position to continue receiving business ‘refugees’ from NJ.  Southern NJ businesses can also relocate to Delaware, ranking #10, or Virginia #15.  The most business friendly state in the nation is Wyoming.  They’re #1, best business climate in the country.

Josh Barro, the author of the index, discussed the specifics of the report in relation to NJ.  The tax Foundation examines five principles of sound taxing policies.

·    Simplicity of taxes makes them easy to comply with.

·    Tax transparency gives businesses and individuals the ability to understand what is the actual tax burden.

·    Stability of the taxing structure enables businesses and individuals to forecast how their future may be affected by taxes.

·    Neutral policies equalize disproportionate burdens on single individual and business segments.

·    Business incentives that are pro-growth and designed to do minimal damage to the economy yet provide revenue that the state needs to function.

Identifiable underlying tax variables have negatively affected NJ’s climate.   Not all of the variables individually rate NJ to the bottom, but when the positives and negatives are combined the negative factors win out.  For corporations some of the elements affecting business are the restrictive carry forward rules on losses, tax credits for jobs and investment in research and development.  On the individual side there is a marriage penalty, high marginal rate in the tax code, and wealth taxes that include the real estate transfer tax, estate tax, and inheritance tax.

In addition to our specific NJ tax issues, we are faced with fiscal impacts from the banking crisis.  The Tax Foundation anticipates reduced income tax collections from job losses, smaller bonuses, reduced capital gain and dividend income, and volatility in graduated income taxes.  Also predicted are reductions in sales tax, corporate tax collections, and reality transfer tax revenue.

Suggestions were made on how the tax climate in NJ can be improved.  The scheduled decrease in the corporate tax rate to 9% in 2009 will be of some help in retaining businesses.  Policy makers should also examine improving the skewed sales tax base, repealing the reality transfer tax, reform estate and inheritance taxes.  For the long term, cuts in tax rates and property tax reform (remember that), were recommended.

Mike Illions from Conservatives with Attitude brought up the newly enacted Paid Family Leave Act and push for the increase in the minimum wage.  The Tax Foundation does not rate regulatory burdens.  We should also consider these in analyzing the specific business challenges for NJ.

Poor economic conditions are spawning numerous Assembly committee meetings in Trenton.  Assembly Speaker Roberts is assuring state workers that state worker layoffs are a last resort.  According to an article in the New York Times, New Jersey is facing an estimated $1.7 billion budget shortfall.

Meanwhile, Governor Corzine is calling for state departments to cut an additional five percent from their budgets.  This statement from Corzine is based on revised projections of what can be the expected in tax revenue to the state from a sliding economy.  Many of us have been screaming for cuts for years.

Time will tell if New Jersey ‘leaders’ define cuts in the same manner as taxpayers and businesses.  From the many news reports I have read, it is a case of too little and too late.

Up scaling would be taxing

What happens when the government mandates increases the minimum wage?  In this case lets examine the State of New Jersey.  There are a few bills lurking in our state that are calling for an increase.  There are also campaigns on the national level that are calling for a “living wage”.  Employers, already experiencing tough times, may need to make some unfortunate and difficult decisions.

Employee one is a first time jobholder and now makes $7.15 an hour, with a scheduled increase to $7.25 on July 24, 2009.  Suddenly, one of the NJ bills is approved and the employee receives a mandated pay increase to $8.50 an hour.  They had been making this lower pay because the employer needs to put a lot of effort into a first time jobholder.  Once the employee is through the basic training, they usually will quickly either obtain a raise, or be looking for another job.

Employee two now making $8.50 an hour is one who has passed the basic training and will now justifiably want to make $9.75 an hour if employee one got a ‘raise’.  Fair is fair.  This scenario will play out through the entire workforce in costs to the employer.  Payroll increases, workers’ compensation increases, and both the employee and the employer ‘contributions’ to state and federal taxes will increase.  Those annoying unemployment fund deficiency and malpractice fund deficiency bills received by businesses from the state will also be higher.  These sudden ‘windfalls’ are certainly a big incentive for an overextended state like NJ to push for an increase in the minimum wage.

In our downward spiraling business and financial environments an employer will seriously consider whether they can do without some of their employees to compensate for the extra costs.   For many businesses a mandated raise in the minimum wage will automatically answer this question.  There are already a number of service sector businesses experiencing loss of customers to Pennsylvania, where the cost of running a business means a decreased customer cost.   Retail stores are suffering as well.  Increased gas costs, Internet availability, business unfriendly NJ, and less disposable income have put major strains on sales and the ability of business to even cover costs.

Follow this through.  Almost all costs will increase to the employer.  Businesses are also consumers.  Therefore, business costs will increase because someone has to pay for the increased pay scale to their vendors and services.  Guess who ultimately pays, the consumer.  Businesses will have to pass on the extra costs plus their own payroll increases to their customers.  There goes that extra $1.25 an hour, not to mention added sales tax revenues to the state.

I envision longer lines at stores that are trying their best to keep down prices by cutting employees.  Stores may not be as clean, or stocking done timely, but the doors may still remain open.

No doubt there will be longer lines at the unemployment office.  Businesses and citizens are both experiencing tough times.  As for that young adult looking for their first job, they will also find it increasingly difficult.

The National Faith-Community Alliance has launched a national campaign to end poverty wages.  They are calling for a federally mandated raise to $10 an hour in 2010.  Another new job for businesses: eliminating poverty by redistribution of wealth.

It is certainly very tiring for businesses to expend energy fighting bill after bill that are not good for free enterprise.  Bottom line if it is not good for business it is not good for consumers or the private employment job market.  But increased wages would be a nice tax collection for the state and federal governments to feed their ever-expanding need for more tax money at no cost or risk to them.

Any mandated increase in the minimum wage would ultimately be a taxing on the citizens of NJ.  People should wake up to the fact that this is a “Trojan Horse”.  A so called “gift” from the government that is actually undermining the economy and their incomes, and another burden on the business sector forcing them to be the “Hatchet Man” while the state reaps the rewards.

NJ shakes down businesses

Businesses are a major source of revenue for New Jersey.  Through sales tax, employee taxes, registrations, licenses, and oh yes fines.  Businesses are major private employers. Here is an overview of the NJ business taxes, located in the Department of Treasury, Division of Taxation.  Collection of these taxes is a business responsibility imposed by the will of the state, with no compensation received for the work and costs incurred or direct training.  Not understanding the rules and missing or miscalculating payments will result in penalties and interest. The state collects these funds at no risk on their part, but don’t be late.  Some taxes are collected twice or more times as in the sale of a vehicle each time, or cigarettes where there is a tax of over $2.60 on each pack, then sales tax is charged at the point of sale effectively taxing the tax. NJ is biting the hands that feed their mouth.

Last year there was the ‘raid’ on businesses that did not have the required disability posters displayed.  These are not mailed to businesses, therefore many did not even know of their existence.  Here is where you can print the Civil Rights Posters and other required posters.

This year it was the turn for gas stations.  The Office of Weights and Measures in the Division of Consumer Affairs under the Department of Law and Public Safety checked the pumps, signage postings, and paperwork.   A list of 350 gas stations was made public giving the appearance that all the stations were gouging consumers.  Many of the infractions were actually minor but now all these businesses have a mark on their name.

Recently, Governor Corzine signed a comprehensive affordable housing bill into law (A-500).  This bill is an epitome of centralized government planning and money redistribution.  It covers a wide range of authority such as municipal mandates, loan appropriations, development fees, and urban housing assistance.  Included in this plan is the Statewide Non-Residential Development Fee Act.  Most business will be assessed a fee of 2.5% on non-residential construction additions and new construction.

Farmers are not listed as one of the exemptions from the 2.5% fee.  Here is a quote from the Politickernj.com by Senator Steve Oroho.

“The politicians in Trenton seem bound and determined to take the garden out of the Garden State,” Oroho stated. “If the DEP, the Highlands Commission and the COAH have their way, farms in this state will soon be nothing more than a bittersweet memory. In order for New Jersey’s economy to grow, we must promote business development and not penalize job growth, in all aspects of our economy, including agriculture.”

 Again on Politickernj.com is a press release by Senator Phil Haines requesting that power plants and renewable energy be exempt from paying the 2.5% development tax.

“Given the language that was used in this legislation, it would appear that the 2.5% non-residential development fee must be imposed upon the public utilities that attempt to construct new power plants, as well as any person who intends to construct any structure to produce energy from renewable sources such as solar technology, photovoltaic technology, wind energy, fuel cells, and geothermal technology.”

“The imposition of a 2.5% affordable housing fee on the value of a multi-billion power plant project could have a damaging effect on the energy bills of New Jersey ratepayers, who will be forced to pay for this new affordable housing mandate every time they turn on a light switch or touch their thermostat.”

Call it a fee, a registration, license, or a regulation.  I call them all a tax.   Even the sunshine and wind in this case will be taxed if a structure is built to take advantage of them. The cost of all of the above will slide to the bottom of the NJ government ‘food chain’, to us the consumers and the taxpayers. They will all be added to the cost of doing business and passed down.

Now that’s a pig

This little big piggy has had quite a feast here in New Jersey and has grown to an enormous size. There have been reports of sightings from increasing numbers. She carries a message for all of us weary taxpayers who are having the ‘bacon’ taken from our pockets to support a bloated state.

To attend the State Summit register here.

Rally on The State House steps on Thursday May 29 at 4 PM.

Help Americans for Prosperity put an end to the trough feeding.