We're Number One (Alas)

It’s great to be number one in something, isn’t it?

For the third year in a row, New Jersey residents enjoy the dubious honor of being the most heavily taxed subjects ... er, citizens in the entire country. 11.8% of every dollar we make gets swallowed by the greedy hand of local government. Of course, government uses it efficiently, providing us with great roads, pristine infrastructure, a "thorough and efficient" education for our children, etc. Right?

But take heart, New Jersey. As we speak, New York faces a massive budgetary crunch and, already, those friendly public employee unions and their "progressive" allies have taken to the airwaves urging a massive tax increase (but only on those nasty, horrible, selfish "rich" folks who refuse to do their "fair share". Jon Shure, please call your office.) In a page right out of Jim McGreevey's Bolshevik playbook, they even call their proposal "The Millionaire’s Tax".

Interestingly, the Northeastern state featuring the freest economic climate – New Hampshire – also enjoys the most spectacular population growth. Residents there pay a (comparatively) paltry 7.6% of their hard-earned income in taxes. NH’s population grew roughly twice as fast as the next best performing NE state during the early part of this decade. Given its tax-happy neighbors, is that population growth any surprise?

Nevada grew the fastest of any state; unsurprisingly, its total tax burden ranked 49th.  A coincidence? Ain’t likely.

One reason for confiscatory taxes stands out: those who directly benefit from massive taxation are significantly more motivated – and organized – to keep the boodle flowing than those who pay those taxes are to cut them.

The National Education Association, for instance, devotes tens of millions of dollars, raised through compulsory dues, to defeat tax relief efforts. No pro-taxpayer group enjoys similar resources.

Consider, too, the illustrative tale of Mount Arlington. The Mayor, concerned about governmental costs in his small Borough (the electorate of which once voted the entire government out of existence) proposed to abolish the local police department, instead contracting with neighboring Roxbury, at substantial savings. This modest proposal met with a wave of public protest, part parochial (they’re "our" cops), part self-interest (I like my job), and the Mayor beat a prudent withdrawal. Now, state mandates and Governor Corzine’s enlightened aid cuts, coupled with that police decision, produced a 46% increase in the municipal tax rate. Cries of ourage followed. 

Lessee... Residents want local services, but blanche at the costs.

This is precisely the effect the Governor intended – force residents of small towns to confront the true costs of local services – and it makes perfect sense. Were it applied with equal vigor to Newark and Jersey City, we would not be the highest taxed state in the nation.

A few simple, albeit profound, changes would, if not solve the problem, at least ameliorate it.

First, evict the Courts from all fiscal policy. NJ owes most of its spending problems to Abbott and Mount Laurel. If we continue down the path set by A-500, which implements Mount Laurel, the direct taxpayer costs of providing the underlying housing will likely exceed $25 billion; indirect taxpayer costs – legal fees, engineering fees, planning costs, new infrastructure – will add tens of billions more. It would be cheaper to shovel money out of the back of trucks in urban areas.

Ditto Abbott, which has achieved essentially no results at massive expense. We just borrowed about $4 billion for urban schools and they tell us they need about another $15 billion, which, of course, will turn out to be insufficient. The costs of miseducating urban students runs three times -- and more -- what some suburban districts spend, but the people spending the money don’t care: they’re not paying the bills.

Spending decisions are political and must be made by those answerable to the electorate, not by courts.

Second, abolish ALL local aid. Each municipality stands on its own feet, securing such resources as it requires for the services it wishes to provide from its own taxpayers. No exceptions. Determine which services ought to be provided locally, which by the state, and permit no intermixing. This ensures political responsibility: the electorate can wreak revenge upon those tho spend too much (or, theoretically, too little). If we determine, for instance, that education should be a state responsibility, fine: give every student in the state precisely the same amount of money, preferably in the form of a voucher. (After all, it matters not where children secure their education, or from whom, provided that they receive it.) No one could possibly bellyache if government treats each of its citizens equally, right?

Third, to ensure that the political process is not tainted by those with an interest in spending other people’s money on themselves, prohibit public employees – and their unions – from participating in politics, either through campaign contributions or working in campaigns. (They could still run "issue ads", like that in New York) The feds long ago recognized that a politicized workforce tends to subordinate the interests of the public it purports to serve to its own narrow self interest, an inherent conflict of interest. NJ should adopt its own Hatch Act.

None of this ensures lower taxes; people might still decide, ala Mount Arlington, that they prefer local services and will pay the increased taxes required. But, at least, it ensures political responsibility and prevents one group or municipality from beggaring their neighbors, sending someone else the bill for their own profligacy.

Obviously, a truly comprehensive effort to reduce the size and scope of government requires substantially more, but the principle – thou shalt not spend other people’s money on thyself – should be the touchstone. Were the people, of the state and of each municipality, to bear the consequences of their political decisions, those decision might well be very different.