Tuesday, May 26, 2009

Tax Hikes Hurt Everyone

New Jersey Senate Republican Whip Kevin O’Toole, a member of the Senate Budget and Appropriations Committee, said that Governor Corzine’s huge, proposed income tax increases will kill jobs in New Jersey, even if they are “temporary’ measures, as the governor claims.
“Increasing taxes is the worst job creation strategy conceivable during a recession,” Senator O’Toole said. “High-income earners who have the resources to create jobs and new business will leave the state, and government will not be able to pick up the slack.

"The Manhattan Institute, a think tank dedicated to free market solutions to society’s problems, estimated that New Jersey would have 4,300 more households making $500,000 or more in 2006 if the state had not raised the top income tax rate to 8.97 percent from 6.37 percent in 2004. The income taxes on those households would have brought in revenue that would have cushioned the state budget during the current economic downturn. A study by Ohio University found that from 1998 to 2007, more than 1,100 people a day moved from the nine highest income tax states, including New Jersey. Most of those people moved to the nine states with little or no income tax, taking jobs and income with them, the study found

“The personal income tax doesn’t just fall on individuals,” O’Toole said. “Owners of certain types of firms pay income tax rather than corporate business taxes. High income tax rates prevent these businesses from generating cash flow to invest in expansion and job creation. That’s one big reason why the owners move their businesses to other states.

“Thanks to Republicans in Congress, the stimulus package includes more than $7 billion in tax breaks for Middle Class New Jersey. Governor Corzine’s plan will negate many of the benefits of that tax cut, delaying this state’s recovery by adding yet another disincentive for entrepreneurs and innovative small businesses to create jobs and grow the economy. I urge Governor Corzine not to go through with his planned tax increases.”

O’Toole pointed out that Democrats raised the income tax in 2004. Now Corzine and other Democrats are proposing to raise the top rate on individuals and companies who earn more than $1 million a year to 10.75 percent, one of the highest rates of any state. He’s proposing that earners with income between $400,000 and $500,000 see their tax rates surge to 8 percent from 6.37 percent. At the same time, governor is planning to cut property tax rebates for everyone but the elderly.

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