Newspaper article The Record (Bergen County, NJ)

Political Pandering on Tax Cuts

Newspaper article The Record (Bergen County, NJ)

Political Pandering on Tax Cuts

Article excerpt

NICE TRY, Assemblyman Greenwald. New Jersey State Assembly Majority Leader Louis Greenwald last week touted his version of a property tax relief plan, but his methods differed from the typical ways in which politicos usually sell their pet priorities.

Greenwald hopped on a conference call with 10,000 members of the American Association of Retired People. The hour-long "town hall" style exchange enabled AARP members to ask questions concerning Greenwald's plan via telephone.

Greenwald proposes giving senior citizens and disabled residents making less than $250,000 a year an income tax credit equal to 25 percent of their property taxes. For non-seniors, the credit would be 20 percent of property taxes. Greenwald wants to pay for the plan by hiking taxes on millionaires.

There are several problems with both the policy, and with the tactic.

Let's start with the policy first.

There is little evidence to suggest that New Jersey can afford such a plan any more than it can afford Governor Christie's proposed 10 percent across-the-board income tax cut, assuming that the realistic revenue projections are relied upon. The governor has made it clear that he would veto a millionaire's tax, so any proposal dependent upon one is either irresponsible because it lacks a funding source, or it is mere political showmanship.

But a real problem emerges when we actually play out Greenwald's strategy. Let's assume that the millionaire's tax is implemented, thus providing the funding source for Greenwald's plan.

One problem with the strategy is that older New Jerseyans are among the most likely group to be millionaires. They often have higher incomes because of years on the job or experience. They are most likely to have multiple and diverse sources of income, including Social Security, pensions, investment income and wages.

So while Greenwald's plan may sound like it is robbing Peter to pay Paul, in fact it may be taking money out of Peter's right pocket and putting in his left.

Except: One issue with increasing taxes on millionaires is out- migration. Research suggests that one group of millionaires is much more likely to move out of state because of higher taxes than any other group: senior citizens, who often are not tied to the state with a job or children in schools. …

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