Governor\’s plan to increase Garden State business taxes by $1 billion during a recession is a recipe for economic suicide, peppered with a touch of the tax man\’s extortion.
WASHINGTON – In a sharp blow to the New Jersey business community, Gov. Jim McGreevey yesterday unveiled a plan to hike N.J. business taxes by a whopping $1 billion. At the same time, the newly elected governor\’s FY 2003 budget seeks to increase state spending by $2 billion over 2002 levels.
The plan seeks to raise revenue by creating a brand new tax on businesses, eliminating business carryover loses, and shifting corporate taxes from profits to sales – all under the guise of "closing loopholes." But in a recession, while corporate profits are falling, the policy will raise taxes on struggling N.J. businesses – forcing many to shut down, layoff workers, axe job creation, and thus depress the standard of living for all Garden State residents.
"\’Expanding the tax base\’ is a euphemism for enacting a gigantic tax hike," said taxpayer advocate Grover Norquist, who heads Americans for Tax Reform (ATR) in Washington, D.C. "Raising taxes on job-creating businesses during a recession is a policy for economic suicide. The governor should pause for a moment and ask himself why new businesses would ever consider locating in New Jersey under these new rules."
McGreevey argues that corporations are not paying their "fair share" of taxes, but the numbers tell a different story. Corporate Business Tax (CBT) revenues increased 78 percent from 1992 to 2000, an annual increase of 8.6 percent and four times greater than the rate of inflation. At the same time, CBT revenue as a percentage of state revenues increased from 7.1 percent in 1992 to 8.1 percent in 2000.
Meanwhile, the governor has asked for a $2 billion, or 9% increase in state spending, again, fully 4 times the rate of inflation. Much of the new spending will fund wasteful patronage projects.
"This is tax-and-spend politics at its worst," continued Norquist. "The governor\’s plan to hike corporate taxes to fund a government-spending spree places the wants of the bureaucracy over the needs of free enterprise. Candidate McGreevey promised New Jersey voters that he would root out mismanagement and waste, but just six months later, Governor McGreevey proposed to raise taxes and increase spending for special interests. Broken promises have led to bad policy for New Jersey."