STUMP » Articles » Taxing Tuesday: Sticking it to New Jersey, Banning Soda Taxes, and More » 10 July 2018, 06:43

Where Stu & MP spout off about everything.

Taxing Tuesday: Sticking it to New Jersey, Banning Soda Taxes, and More  

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10 July 2018, 06:43

I said I’d leave off New Jersey last Tuesday… but that’s just because I had more than enough from tax crap last week.

NOW let us stick it to NJ.

A whole bunch of tax legislation passed in NJ recently.

OVERALL TAKE: FLORIDA AND TEXAS, WELCOME THE FLEEING YANKEES

WSJ editorial: New Jersey’s Tax Gift to Florida

The wizards of Trenton decide to drive more residents out of state.

Call it the consummate New Jersey compromise. Governor Phil Murphy and State Senate leader Steve Sweeney have been fighting over whether to raise tax rates on individuals or businesses, and over the weekend they decided to raise taxes on both.

Messrs. Murphy and Sweeney agreed to raise the state’s income tax on residents making more than $5 million to 10.75% from 8.97% and the corporate rate on companies with more than $1 million in income to 11.5% from 9%.

This will give New Jersey the fourth highest marginal income tax rate on individuals and the second highest corporate rate after Iowa. The corporate tax increase will supposedly last two years and then phase out over the next two years, but that’s what politicians always say.

The two Democrats claim this will do no harm because about 0.04% of New Jersey taxpayers will get smacked. But those taxpayers account for 12.5% of state income-tax revenue and their investment income is highly mobile. The state treasurer said in 2016 that a mere 100 filers pay more than 5.5% of all state receipts. Billionaire David Tepper escaped from New Jersey for Florida in 2015, and other hedge fund managers could follow. Between 2012 and 2016 a net $11.9 billion of income left New Jersey, according to the IRS.

Hey, New Jersey tax officials, I have one piece of advice: go talk to your equivalents in Connecticut.

They know how to keep tabs on their top 100 taxpayers.

“There are probably a handful of people, five to seven people, who if they just picked up and went, you would see that in the revenue stream,” said Kevin Sullivan, the state’s revenue services commissioner.

That is pretty bad. For one, there is an obvious opportunity for corruption. Those 5-7 people want a special deal/perk that doesn’t come out of the revenue stream? You’d better cater to their wishes.

Oh look.

Two years ago, tax officials were alarmed that a super-rich hedge fund owner might leave and reduce the state’s income tax revenue. They met with the unidentified taxpayer. The effort was partly successful, with the taxpayer’s leaving Connecticut but agreeing to keep the hedge fund here.

I’m really looking forward to the stories about New Jersey bribing billionaires to stick around, just like Connecticut does.

TAX THE CORPORATIONS!

John Bury has been all over the NJ legislative session, but I’m going to pull out one item in particular from his recent post on the new corporate tax rate:

At 13% New Jersey now has the highest top corporate tax rate in the nation. The argument for the hike is that most corporations got a massive reduction on their federal taxes and they can afford to pay New Jersey more. The question remains why they would want to pay New Jersey more as they are competing against companies in other states that also got that massive federal tax cut in addition to those tax cuts from their home states who are eager to keep them in business there.

That’s the problem in a nutshell, eh?

Who wants to live in New Jersey? A lot of people live there because it’s cheaper than being in NY. That’s its main draw.

It’s not just individuals – it’s also corporations. I remember a bunch of previously-Manhattan-based corporations moving offices to NJ when I was working there. A lot of the Prudential & MetLife folks got pushed over the border… and as many of the employees were already living over in NJ, it may have been a boon to them.

But if you’re going to have to pay the same high taxes, what’s the point? Might as well go somewhere cheaper.

Corporate tax rate map from the Tax Foundation:

That was before the NJ law, of course.

So an increase from 9% to 13% — that’s a 4 percentage point increase. No big deal, right?

IT’S A FRICKIN 44 PERCENT INCREASE IN THE TOTAL TAX ON THE SAME INCOME.

I swear.

Other John Bury posts on the NJ legislation:

More New Jersey tax commentary

On the last: here is my not-shocked face.

via GIPHY

BANNING SODA TAXES

Soda Taxes Started in California. Now the State Is Banning Them.

California cities and counties won’t be allowed to tax soda for the next 12 years after Gov. Jerry Brown signed fast-moving legislation Thursday.

The bill, which was first unveiled Saturday evening, prohibits local governments from imposing new taxes on soda until 2031. It comes after a deal was struck between legislators and business and labor interests who agreed to remove an initiative from the Nov. 6 statewide ballot that would have restricted cities and counties from raising any taxes without a supermajority vote of local citizens.

Hmmm, I think I see that this isn’t really about soda taxes.

This is about tax increases to pay for pensions.

During debate on the legislation, Assembly Bill 1838, legislators said they reluctantly voted to impose the moratorium because the ballot measure, for which signatures were gathered by a political campaign financed by more than $7 million from the beverage industry, would have been worse for state and local government coffers.

Yup.

The beverage “industry is aiming basically a nuclear weapon at governing in California and saying if you don’t do what we want, we’re going to pull the trigger and you are not going to be able to fund basic government services,” Wiener said. “This is a pick-your-poison kind of situation, a Sophie’s choice. What the Legislature is doing is perfectly reasonable.”

Minutes after Brown signed the soda tax ban, proponents formally withdrew their initiative from the statewide ballot. The deadline to do so was Thursday.

By the way, I did a CTRL-F (find) “pension” in the page.

Never mentioned.

Bet you, if they didn’t have to pay for unfunded pensions of the past (and retiree health benefits, etc), the municipalities would have no problem funding basic services.

Activists were stunned by the quick action on the soda tax ban. Carter Headrick, director of state and local obesity policy initiatives at the American Heart Assn., said using a ballot initiative to leverage lawmakers to prohibit soda taxes in communities across California was “blackmail.”

“I don’t think the [beverage industry] ought to be forcing legislators to be taking away the rights of people to vote,” Headrick said.

Some lawmakers attacked the deal because they supported the initiative. Sen. Jeff Stone (R-Temecula) said that Thursday’s decision subverted the will of Californians who wanted to keep their taxes low.

“This bill tells 1 million people that signed this petition to make it harder to raise their taxes that their voices don’t matter,” Stone said.

Hey California voters — you know how to make your voice matter? If they vote for higher taxes, you recall their asses.

It just happened, y’all. So just do it again.

Yes, this requires you paying attention and then recalling the pols. JUST DO IT!

Also, I have no brief for the soda tax folks. If they’re not applying it to apple juice or orange juice – which are also full of sugar – then they don’t really want to fight diabetes.

so nyah.

In other soda tax news: This sign on a vending machine at my work

It’s more that the soda tax is idiotic, more than anything else. It’s slapped on sodas with no sugar, and juice with even more sugar than soda is not taxed.

And then there’s the whole iffy concept of soda-drinking causing obesity and diabetes. Plenty of us who don’t drink anything other than selzter and tea are fat.

OTHER TAX LINKS

TAX TWEETS

UK and tax havens:



Hey now, Bermuda is not only good for tax haven. You should try a real Dark & Stormy!


Social media tax in Uganda:






Soda tax:





See you with more tax stuff next week!