Cory Booker's Tax Increase Plan
BookerFail.org already did a great write-up of the Booker tax plan earlier today, so I won't repeat the good work they've done there. I would just add four thoughts:
The Booker plan is a net tax hike of $500 billion to $1 trillion. BookerFail demonstrated that the gross tax increases in the plan total some $1.5 trillion over the next decade. Giving Booker credit for his corporate income tax rate cuts and other tax relief lowers the impact, but it's still a massive net tax hike. Using a back of the envelope calculation, we'd estimate the net burden at more than $500 billion but less than $1 trillion over ten years.
The Booker plan is a straight rip-off from the Obama 2012 re-election campaign. Reading the proposal would give tax experts flashbacks to this February 2012 campaign document, or even this more recent dust-off of the same. Call it "tax reform by copy and paste." And you thought most politicians were lazy.
The plan would still leave New Jersey employers paying the highest income tax rate in the developed world (almost). The plan touts a cut in the federal corporate income tax rate from 35% to 28%. A 28% federal rate doesn’t get you anywhere, though, if you’re looking to help international competition.
New Jersey’s corporate rate is 9%, so you would still have a combined marginal rate of 34.5%, even after accounting for the deductibility of the state tax on federal returns. Compare that to the developed nation average, which is under 25%. New Jersey employers would still be paying the highest tax rate in the developed world, except for outlier country Japan (who has a 37% rate).
New Jersey incorporated employers would still face a higher marginal income tax rate than major global competitors Canada, Mexico, the U.K., France, and Germany.
The plan raises taxes on New Jersey partnerships, Subchapter-S corporations, LLCs, and other startups. Booker has no plan to lower the tax rate for unincorporated small businesses in New Jersey. That rate easily approaches 50% (federal-state combined). Why does Booker want to lower rates for giant multinational companies (and even here, not enough to make a difference), but not for Main Street New Jersey small and mid-sized employers? Does he not know how the tax system is set up for employers?
According to the IRS, New Jersey is home to over 600,000 sole proprietors, and nearly 300,000 owners of partnerships and S-corporations. These 900,000 New Jersey business owners won't get rate relief under the plan, but they will pay all the tax increases. That's not fair.