Sunday, January 29, 2012

Progress in New Jersey

The WSJ has an interesting update on Governor Christie's progress in New Jersey. A few excerpts:
Economically, unemployment in the state has fallen to 9% from a high of 9.8%. With almost 3.9 million people working, New Jersey has added almost 60,000 private-sector jobs since he took office, while shedding more than 21,000 government jobs. Reforms of the pension and health programs for government employees will save taxpayers an estimated $120 billion over the next 30 years. A new limit on local property-tax increases appears to be working.

Mr. Christie says that he can now push for the tax cuts that he promised would happen if the state controlled its spending. The governor made that promise while seeking the job in 2009, and he recalls the skepticism at various newspapers during the campaign: "They looked at me like I was an alien." Because many media folk couldn't believe the state government could afford to reduce tax rates, "They just basically accused me of lying to get elected."


Having spent his first two years playing defense against unsustainable spending, Mr. Christie is eager to start competing with neighboring states for jobs, talent and capital. Step one was to decide which tax reform would be the biggest draw for new residents and new businesses. He chose to attack the income tax because "that will be the thing that will make us the most competitive from a jobs perspective." His decision was made easier when he saw neighboring New York Gov. Andrew Cuomo push through an income-tax increase in December.

"When Governor Cuomo raised taxes over here that made it even more attractive for me to go after the income tax . . . from a competitive perspective." He adds that with Gov. Dannel Malloy also enacting a tax increase in Connecticut last year, "it's a strategic decision as much as a philosophical decision."

New Jersey has a long way to go. This week the Tax Foundation again rated it dead last among the 50 states for its overall business tax climate. As for individual income taxes, Mr. Christie notes that since 2003 the top marginal rate has risen to 8.9% from 6.25%. If Mr. Christie succeeds in knocking that top rate down to a flat 8%, Jersey will still be above Connecticut's 6.7%. But since Connecticut now edges New Jersey for the country's highest property taxes, according to the Tax Foundation, the Garden State is at least in the ball game.


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