Thursday, September 24, 2009

NJ's Onerous Tax Burden

It was quite ironic that New Jersey's Cost of Government Day was observed on the Sunday of Labor Day weekend (September 6).
That is the date, calculated by the Center for Fiscal Accountability, when the average worker in the Garden State has earned enough gross income to pay off their share of the spending and regulatory burdens imposed by state, local and federal government.
The national date was observed on August 12 (almost a full month later than 2008). Viewed in a different light, 61 percent of the national income is absorbed by the cost of government.
The average American worker labors 111 days to pay for federal spending, 49 days for state and local spending and 65 days to support federal and state regulations. The New Jersey labor force must work an additional 25 days beyond the national average to reach its Cost of Government Day.
And how does the state compare to the rest of the nation? It is not terribly surprising that only Connecticut achieved a date later than New Jersey, theirs was September 7. Pennsylvania's celebration took place on August 14, Delaware's was on August 9, and New York observed its date on August 31.
To put these dates into perspective, workers in Pennsylvania and Delaware have an advantage of three or four weeks of earnings for their discretion and New Yorkers a one week benefit, while people in New Jersey continue to support the cost of government.
While all states absorb the number of days figured to absorb federal spending, the key variable in their individual "celebration" date is the cost of state and local government. Perhaps the factor that contributes most to New Jersey's dubious ranking is the tax increases workers have been saddled with since 2003.
Over the course of the last seven fiscal years, New Jersey government has cumulatively increased taxes by over $21 billion, or $2,447 per person. The per capita figure is by far the highest in the country, as Connecticut follows with a $1,807 per person tax increase during this interval.
One of the consequences of relying on increasing taxes to raise revenue in order to sustain and boost spending is the out-migration of population to more tax-friendly states such as Florida. The result of losing their income is a heavier burden being placed on those who remain, especially the state's middle class.
New Jersey's fiscal 2010 budget increased taxes by over $2 billion. That will only serve to further fuel more people leaving the state and increasing the per capita tax burden on those who live here.

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