New Jersey Prepares To Raise Taxes On "Almost Everything" As It Nears Financial Disaster

Last week we noted that in what was a radical U-turn to what other public pension funds have been doing in recent years - most notably Calpers  - the struggling New Jersey public pension system decided that instead of lowering its expected rate of return, it would raise it, from 7% to 7.5%.

The simple reason behind this odd increase in projected returns was an accounting sleight of hand which would allow the state of New Jersey to save some $238 million in pension contributions as a result of the higher discount rate applied to the fund's liabilities. And with a pension funding level of only 37% for the 2015 fiscal year, the worst of any state in the US, New Jersey would gladly take even the most glaring accounting gimmickry that would delay its inevitable death.

Unfortunately, being the not so proud owner of the most distressed and underfunded public pension fund in the US is just the start of New Jersey's monetary woes, and as Bloomberg reports, New Jersey's fiscal situation is so dire that new Governor Phil Murphy has proposed taxing online-room booking, ride-sharing, marijuana, e-cigarettes and Internet transactions along with raising taxes on millionaires and retail sales to fund a record $37.4 billion budget that would boost spending on schools, pensions and mass transit.

The proposal which is 4.2% higher than the current fiscal year’s, relies on a tax for the wealthiest that is so unpopular it not only has yet to be approved, but also lacks support from key Democrats in the legislature, let alone Republicans. It also reverses pledges from Murphy’s predecessor, Republican Chris Christie, to lower taxes in a state where living costs are already among the nation’s highest.

Murphy, a Democrat who replaced term-limited Christie on Jan. 16, said his goal is to give New Jerseyans more value for their tax dollars; instead he plans on bleeding them dry. He has promised additional spending on underfunded schools and transportation in a credit-battered state with an estimated $8.7 billion structural deficit for the fiscal year that starts July 1.

“If we enact another budget like the one our administration inherited, our middle class will continue to be the ones shouldering the burden, while seeing little in return,” Murphy said Tuesday in his budget address to lawmakers. His solution? Socialist wealth redistribution: "A millionaire’s tax is the right thing to do –- and now is the time to do it."

A better way of putting it, as Bloomberg has done, is that New Jersey's budget "would raise taxes on almost everything."

Of course, that is not a politically palatable thing to say, so let's first crush the millionaires; the same millionaires who - like David Tepper in April 2016 - have decided they have had enough and departed for Florida long ago, taking with them hundreds of million in foregone taxes. Because what New Jersey fails to grasp, is that the truly rich can pick up and go at a moment's notice, and transfer to any place in the country (or outside of it) that actually does not endorse daylight robberies.

Meanwhile, the idiocy proposed by Gov. Murphy counts on total revenue growth of 5.7%, an impossible number and the most since at least 2013... when it fell short. Murphy would increase the tax rate applied to income above $1 million to 10.75 percent from 8.97 percent, generating $765 million; and restore the state’s sales tax to 7% from 6.625%, raising $581 million.

Guaranteeing that the state's hedge fund residents would promptly flee, the budget would also "gain" $100 million by closing a carried-interest loophole on hedge-fund income.

He must be kidding,” Senate Minority Leader Tom Kean Jr., a Republican from Westfield, said after the speech. “I don’t think anybody could have anticipated this level of tax increases.”

So where would the money go?

Murphy’s proposal would almost triple the direct state subsidy for New Jersey Transit, which has been plagued by safety and financial issues. Including funding for the agency from the state’s Turnpike Authority and an energy fund, he boosts money for New Jersey Transit by about a third.

His plan also includes a move to raise the state property-tax deduction to $15,000, which would benefit about one-third of homeowners, according to a budget summary. It also would create a child-care tax credit and increase the earned-income tax credit.

The budget also plans for four-year phase-ins of a $15 minimum wage and full school funding as mandated by the state Supreme Court, and a three-year path to make community college tuition-free.

Oh, and speaking of the above pension woes, guess who will be on the hook to make the state's public workers whole? Why taxpayers of course as the budget includes a record $3.2 billion pension payment, putting the state on course to resume full funding by 2023, according to budget officials.

And though the short-term effect may be positive, between the taxpayer subsidy and the idiotic hike in return assumptions, it won’t fix a system with a combined unfunded payments and medical-benefits liability that reached $184.3 billion in 2017, according to a March 5 commentary by S&P Global Ratings. The two biggest funds are forecast to be broke in 2024 and 2027.

“You kept hearing the same word: investment, investment, investment,” said Assembly Republican Leader Jon Bramnick, from Westfield. “Let me interpret that for you: It’s taxes, taxes, taxes.”

* * *

Unfortunately for New Jersey, it may be too late: according to Bloomberg, Murphy met with the major ratings agencies in New York earlier this month to outline his financial plan (New Jersey’s credit rating is the second-worst among U.S. states, trailing only Illinois). That however won't stop the local democrats from trying.

Senate President Steve Sweeney, a Democrat from West Deptford and the highest-ranking state lawmaker, was a perennial sponsor of a millionaire’s tax during the Christie years, only to see the governor veto it seven times. In the wake of President Donald Trump’s $10,000 limit on state and local property-tax deductions, though, Sweeney says the extra charge would drive more wealth from a state that already has the nation’s highest property taxes.

Yet what is strange, is that the two top wealth redistributors, Sweeney and Murphy, now disagree on how to fatten state coffers. Last week Sweeney outlined a proposal for a 3% surcharge on corporations earning more than $1 million annually, for an estimated $657 million. Murphy said he wouldn’t accept it as an alternative to his plan.

Sweeney, in a joint statement with other Senate Democratic leaders, said Murphy’s budget “includes many ambitious proposals that are appealing, but will require thorough review and consideration to determine if they are achievable. We will maintain an open mind throughout the budget process.”

Meanwhile, Murphy’s plan for the fiscal year starting July 1 counts on $80 million of revenue from a plan to legalize recreational marijuana by January 2019. He also intends to expand access to medical marijuana. However, the governor is receiving push-back on recreational marijuana from Republicans and some members of the Black Legislative Caucus. Though polls show majority public support to make New Jersey the 10th state to allow the drug - and Murphy says its taxation would generate hundreds of millions of dollars - opponents say it would harm youngsters in poor communities and lead to increased use of outlawed substances.

Murphy’s plan to raise the sales tax likely also will be a tough sell. The last two New Jersey governors to do so, Democrats Jon Corzine and James Florio, were ousted after one term.

In short, New Jersey's democrats can't even agree how to best fleece the rich, meanwhile the state careens ever faster toward financial disaster.


LSD - Lower Sl… pier Tue, 03/13/2018 - 21:43 Permalink

Fuck off, spam-boy.

Are you really that dense where you see that your bibilcrap site gets ZERO clicks from ZH yet day in, and day out, you keep spamming ZH, desperate for clicks? And yeah, yeah... we all get it that you hate Israel  - to the point where you scream it at everyone in EVERY thread like a retarded four year old.

In reply to by pier

mkkby ThinkerNotEmoter Wed, 03/14/2018 - 17:14 Permalink

Where are the small gov't conservatives??? 

Not one spending cut can be considered.  Everything gov't does is a high priority requirement.  There is no waste at all.  WTF is going on???

We need mass detroit-style bankruptcies to clean the slate.  Elect only *radical* conservatives.  Radical now means able to see even the smallest amount of waste in spending.

In reply to by ThinkerNotEmoter

ZeroSpam pier Tue, 03/13/2018 - 21:57 Permalink

^^^  pier   ^^^  CHRONIC SPAMMER

This chronic spammer (aka "stizazz" and "lloll" -- recently banned) is a CHRONIC SPAMMER whose "disguised links" (FINANCIAL DISASTER, above) will take you to his Spam- and Trojan-laden webpage, fondly known by ZHers as "The Whacked Out Biblicism SPAM page" where you will be the happy recipient of numerous virus from this very disturbed and obsessed individual, spamming here for more than five years.


Copy and send this text to

"Please remove all postings and ban log-on from user "PIER" who chronically posts short-URL links to his virus- and spam-filled website.  This is the same individual posting chronically as recently-banned "STIZAZZ" and "LLOLL", among dozens of other banned log-ons (that's YOU dailywesterner  and  biblicisminstitute).       Thank you."

In reply to by pier

Conscious Reviver ThinkerNotEmoter Tue, 03/13/2018 - 22:03 Permalink

Stop this Liberal v. Conservative baloney. That's the game you are supposed to be playing to keep you occupied. Meanwhile, the true game, approaching peak cycle, that you are not even watching is called Looters v. Lootees.

You can't see it yet. But in time you will.

And please stop giving up the language. Liberal means that you support an individuals rights. To bear arms for example.

Free John Corzine.

In reply to by ThinkerNotEmoter

ThinkerNotEmoter Conscious Reviver Tue, 03/13/2018 - 22:16 Permalink

"Stop this Liberal v. Conservative baloney. That's the game you are supposed to be playing to keep you occupied."

Actually that's a bunch of crap.  Even with The Joooooooos running everything, the people and politicians who believe that full-tilt socialism is the best political system - yes, today's liberals - are pushing hard to destroy the U.S. and U.S. Constitution.

Get your head out of your ass and look around.

And, yes, definitions change over time.  It's true.  And it happens.  Liberalism of the 50's isn't the same as it is today.  Evolve.

In reply to by Conscious Reviver

Conscious Reviver ThinkerNotEmoter Tue, 03/13/2018 - 23:35 Permalink

EmoternotThinker, who said anything about "the people and politicians who believe that full-tilt socialism"??

I said you like many others, because of the TeeVee, mis-use the term liberal. 

What you are talking about are Communists. Just get your terms straight and don't let the TeeVee invent new language for you. Manipulating the semantics is right up there with inventing new history.

In reply to by ThinkerNotEmoter

Veritas X- Chupacabra-322 Wed, 03/14/2018 - 03:02 Permalink

Hello C-322.

I left N.J. 1974. Left the country permanently 40 years ago.

When was working in KSA-Saudi Arabian's desert in the '70's, one of my colleagues who eventually took an Olympic Bronze Medal, told me the following:

A.B. : "Did you hear New Jersey is gonna host its own Bowl Game(i.e. Rose-, Orange-, Super-, etc.) beginning this year?".

Me: "No. I haven't lived there since '74 so I don't follow things so much in N.J. Tell me about it then."

A.B. : " Yeah. They finally got 1. You know what it's gonna be called?".

Me: "Nope. Tell me".

A.B. : "It's gonna be called *The Toilet Bowl* ".

I fuckin' laughed when I heard that.

He knew even though he was from New Mexico.


ps. this tax thing explains why my 2 siblings 'stole' my inheritance; i.e. the only thing of value in N.J. is MONEY!!!

everything else comes 2nd to those a__holes living there.

In reply to by Chupacabra-322

EddieLomax Conscious Reviver Wed, 03/14/2018 - 12:51 Permalink

I'm bowled over here by the combined of desperation in the taxes they are raising to try and pay for the spending, and the lavish new spending priorities they've decided to take onboard.

Its weird, its like they're a bunch of gambling addicts trying to act responsible all at the same time, great theater, but I pity the fools who voted these clowns into office.

In reply to by Conscious Reviver

Omen IV Dorado Tue, 03/13/2018 - 19:12 Permalink

Florida is Mecca for White People

escape the black and brown dystopia

white people are required to pay for their FUN whether it be recreation or PROCREATION

Public education - advanced baby sitting - must be ended - it has no purpose they are not educable - if you want to breed pay for the welfare of the spawn


we are close to the end of the Democrats Looting  System

In reply to by Dorado

Omen IV Dorado Tue, 03/13/2018 - 19:12 Permalink

Florida is Mecca for White People

escape the black and brown dystopia

white people are required to pay for their FUN whether it be recreation or PROCREATION in NJ

Public education - advanced baby sitting - must be ended - it has no purpose - they are not educable - if you want to breed pay for the welfare of the spawn


we are close to the end of the Democrats Looting  System

In reply to by Dorado

Twee Surgeon Omen IV Tue, 03/13/2018 - 20:23 Permalink

Visit Tampa or Miami on your next visit and enjoy these mostly Nordic enclaves.

The housing cost's are catching up with California at a rapid pace. Taxes are high and the traffic is gridlocked in many places.

Whoever does these surveys and statistics is full of shit. Wait to see the level of driving skill on the freeways around Miami.


In reply to by Omen IV

uhland62 Twee Surgeon Wed, 03/14/2018 - 01:38 Permalink

They may need an amphibious vehicle in a few years. It gets flooded there regularly because either the towns are sinking or the waters rising, or maybe both. 

While the Federal taxes need to go into new wars and paying off the old ones, there's nothing left for the States. It only follows that they either shut up shop or get it from somewhere. Is there an obligation to have a State government?  

The tariffs for steel and aluminium go into Federal coffers but nobody tells you what they'll be spending it on!!!

In reply to by Twee Surgeon

The Ram Dorado Tue, 03/13/2018 - 19:22 Permalink

Well, I live in South, FL and if someone thinks there going to get a bargain living here, Good luck with that.  The general cost of living is not cheap, the number of quality professional jobs is few, and the salaries for 'professional jobs' are a joke.  Let them come down and they better bring lots of money if they need to be employed!

In reply to by Dorado