Archive for the ‘New Jersey’ Category

Out of the Swamplands

Sunday, January 29th, 2012

Over the years, I’ve referred to New Jersey as the swamplands. Their politics, corruption, and tax policies left a lot to be desired. But something unusual happened in 2010: Chris Christie, a Republican, was elected governor in the historically Democratic state. This past week Governor Christie decided he’d like to improve on the Tax Foundation’s ranking of New Jersey as the worst state in the country for taxes; he proposed a 10% across-the-board cut to the state’s income tax.

I do need to point out that even with a 10% cut New Jersey’s top income tax rate would be 8%. That’s quite high, but in comparison to the nearly 13% a New York City resident would pay it’s not that bad.

I have no idea if Governor Christie will be successful or not but the Wall Street Journal noted that his proposal has caused Democrats to propose lowering other taxes. Meanwhile, Governor Jerry Brown of California proposes higher taxes. If both Governors are succesful I suspect that next year California and New Jersey will swap places on the Tax Foundation’s rankings so that the Bronze Golden State will truly be tarnished.

Tax Foundation Releases 2012 Business Tax Climate Index; California, New York and New Jersey at the Bottom

Wednesday, January 25th, 2012

The Tax Foundation released their 2012 State Business Tax Climate Index today. And it was no surprise to see the bottom three composed of California, New York and New Jersey. These states have high taxes overall (California adds high regulatory costs, too; however, the business climate index ignores this). Meanwhile, Wyoming, South Dakota, and Nevada are the top three states. No surprise: These states don’t have high taxes (they don’t have personal or corporate income taxes at all).

Here are the top ten:
1. Wyoming
2. South Dakota
3. Nevada
4. Alaska
5. Florida
6. New Hampshire
7. Washington
8. Montana
9. Texas
10. Utah

And the bottom 10:
41. Iowa
42. Maryland
43. Wisconsin
44. North Carolina
45. Minnesota
46. Rhode Island
47. Vermont
48. California
49. New York
50. New Jersey

For those who wonder if business pay attention to taxes, I can speak from experience: They do.

Today Is the Day to Prepare (Hurricane Irene)

Thursday, August 25th, 2011

If you are a resident of New Jersey, New York City/Westchester County/Long Island, Connecticut, Rhode Island, or Massachusetts, you need to drop what you’re doing and get prepared for Hurricane Irene. Now.

Maybe we’ll get lucky and Hurricane Irene will veer out to sea. However, the current forecast track map puts Irene directly over the New York metropolitan area on Sunday. Unfortunately, there is no reason to think that Irene will veer away; the recent forecast maps have moved Irene toward the west rather than the east.

Hurricanes don’t strike New York City often, and I suspect residents of the Big Apple think this might be just another storm. The effects, though, of a direct hurricane strike might be truly horrifying: Flooding the subway system for weeks to months, devastation along the Long Island shore, flooding in lower Manhattan, millions without power, etc.

If you reside in a low-lying flood-prone area in the Northeast threatened by Irene, consider taking action today. The moment that government authorities announce possible evacuations, people will panic. Buy your supplies now. The National Hurricane Center has links to preparedness guides.

Again, I am hopeful I’ll be looked at in a week as a fear-monger. I just remember the last time I saw such a map, and the disaster that occurred (Katrina). I also remember a saying from my mother: Better safe than sorry.

Some Resources:
National Hurricane Center (Irene Home Page)
Dr. Jeff Masters’ Blog
Ryan Maue’s Twitter Feed
Brendan Loy’s Blog

And, most importantly, your local office of emergency preparedness.

Hopefully, my writing this post is much ado about nothing. I just don’t like what I’m seeing on the maps.

The Giants Face the Taxman

Monday, March 7th, 2011

Football season is over, but the New York Giants are still in a fight. The Giants faced off against East Rutherford, New Jersey in state tax court last week.

The battle is over whether or not the Giants should pay property tax on their practice facility, the Timex Performance Center. According to this story on, the issue resolves around the legislation that created the Meadowlands 40 years ago.

Back then, the suspension of property taxes attracted the New York Giants (who used to play at Yankee Stadium in the Bronx, New York) to cross the Hudson River and play in East Rutherford, New Jersey. Now the question is whether or not the law absolves the Giants from paying property tax on ancillary facilities. The news story also notes that it’s possible the Giants could, if the Court rules against them, be forced to pay property taxes on their $1.6 billion replacement to the original Giants Stadium.

In any event, states and localities use taxes to attract businesses. This usually leads to predictable shenanigans, such as the Iowa film credit fiasco. Of course, some states do this in reverse, raising their taxes so that business figure out that the grass is greener on the other side of the fence.

As for the Giants, a loss in state tax court would likely be a loss for their fans as that additional cost would undoubtedly be passed on to their customers in the form of higher ticket prices.

Reality Hits the Swamplands

Thursday, February 11th, 2010

I poke fun at New Jersey. The politics in the Garden State have been high on corruption and low on common sense. But in a shock (a very welcome and surprising shock) last November New Jersey residents said enough. Governor Chris Christie told New Jersey that the state is basically broke and that, “Today, the days of Alice in Wonderland budgeting in Trenton end.”

Hallelujah! A politician understands that whatever you take in, you must spend less. His entire speech is well worth perusing. Governor Christie announced cuts to 379 programs, including not making a $100 million contribution towards pensions. Of course, expect the public employee unions to yell foul and complain that Governor Christie is harming children, etc.

There’s a simple problem: You can’t spend money you don’t have. Government needs to be limited in scope and size. Unfortunately, most states operate like they have printing presses. And please don’t talk to me about the current administration in Washington.

It will be interesting to see how far and fast budget reality spreads. It will be spreading as there aren’t any other real options. Unfortunately, California figures to be among the last to grasp reality.

Government 2, Democrat 0, Republican 0

Sunday, January 24th, 2010

Roger Corbin was a founding member of the Nassau County (Long Island, New York) Legislature. He was arrested last year and accused of filing false federal tax returns and lying to agents of the FBI and IRS. He allegedly received $226,000 from developers—checks made out to “Cash”—and deposited them in his personal account. He then allegedly ‘forgot’ to include them on his tax return. He compounded this by then allegedly lying to government agents.

His attorney, Thomas Liotti, told the Associated Press that he will plead guilty to tax evasion on Monday. Mr. Liotti, a Democrat, was defeated in his re-election bid last fall.

Across the Hudson River, another politician is in trouble. Leonard Kaiser, the former Republican mayor of North Arlington, New Jersey, and the former executive director of the Bergen County Utilities Authority and the Meadowlands Commission, pleaded guilty to tax evasion. Mr. Kaiser’s wife also pleaded guilty to a similar charge.

Mr. Kaiser’s troubles stemmed from his 2002 re-election bid. Mr. and Mrs. Kaiser wrote checks from their 2002 campaign fund to Mrs. Kaiser for “salary.” However, New Jersey law doesn’t allow personal use of campaign funds, and the payments weren’t disclosed on campaign financing documents or on their tax returns. Given that the total income involved is $30,000, a minimal sentence is likely.

Public servants indeed.

What’s $2 Trillion Among Friends

Saturday, January 9th, 2010

From the Financial Times comes word that there are $2 Trillion worth of unfunded pensions at just the state and local level in the United States. The Financial Times article relies on a study by Orin Kramer of New Jersey’s pension fund.

The estimate by Orin Kramer will fuel investors’ concerns over the deteriorating financial health of US states after the recession. “State and local governments are correctly perceived to be in serious difficulty,” Mr Kramer told the Financial Times.

“If you factor in the reality of these unfunded promises, their deficits will rise exponentially.”

Estimates of aggregate funding requirement of the US pension system have ranged between $400bn and $500bn, but Mr Kramer’s analysis concluded that public funds would need to find more than $2,000bn to meet future pension obligations.

This has huge implications for American taxation, and for residents in states and localities impacted by this (including California):

  1. Would the elected officials attempt to fix the unfunded pensions by decreasing benefits, decreasing eligibility, increasing taxes, or just ignore the problem?
  2. Would local officials declare Chapter 9 Bankruptcy? (Bankruptcy is not allowed for states.)
  3. Would individuals in impact locales move to avoid higher taxes?
  4. What impact will this have on public employee unions?

If you see a mess on the horizon, you’re dead-on accurate. Add in lots of problems on the state level, a very low return on lots of investments (which hurts pension funding), and extreme resistance to higher taxation and you end up with a Grade A disaster.

Some of the time the light at the end of the tunnel is the end of your problems. Here, I think it’s the oncoming train.

Swamplands Looking at a Tax Hike?

Sunday, March 15th, 2009

California isn’t the only state that’s looking to raise taxes during a recession. The swamplands (aka New Jersey) are also looking at this tactic.

Governor Jon Corzine (a Democrat), who coincidentally is up for reelection this fall, is proposing a 0.97% increase in taxes on those who make more than $500,000. The tax would be for just one year, and would help to close a $7 billion budget deficit. Governor Corzine’s budget proposal is $3 billion less than the current year.

Also included in Governor Corzine’s proposal is cutting payments into the New Jersey state pension system by $500 million. That may be problematic: Most state pension systems have funding shortfalls. Cutting payments into the system will only exacerbate these problems.

Severe budget cuts will likely be coming to a state near you, too. It’s not just a California issue.

Blinders Here, Blinders There

Wednesday, November 26th, 2008

The dysfunctional California legislature was unable to resolve the budget fiasco yesterday. Democrats proposed a plan that would have tripled the car tax and made a few symbolic budget cuts; Republicans refused to vote for it because they want a permanent measure mandating spending limitations.

The new legislature is sworn in next week. Unfortunately, I suspect that the only difference will be the names and Sacramento will be as dysfunctional as ever.

This is having an impact on California’s ability to sell bonds. Interestingly, the prices for bonds may imply that the state has a huge risk of bankruptcy. At least that’s what a British commentator has said.

And California isn’t the only state in such danger. Michigan, Nevada, and New Jersey are on the list, too. Let’s look at each in turn.

Michigan is likely on the list for two reasons: the troubles with the automobile industry and the state’s miserable business climate. The automobile industry dominates Michigan and there’s a real chance that the entire Big Three (GM, Ford, and Chrysler) will declare bankruptcy. There’s even a higher risk of huge job losses as these companies are going to have to restructure. Meanwhile, the government in Michigan raises taxes on all businesses—I’m sure that’s attracting lots of businesses to Michigan….

Nevada has hit a downturn, too. But there’s a big difference between Nevada and California. The legislature in the Silver State and Nevada’s Governor have reached an agreement on a short-term solution (though there appears to be some smoke and mirrors with that). And Democrats there appear to have some sense of fiscal reality. Steven Horsford (D-North Las Vegas), Nevada Senate Majority Leader told AP, “All of the options are very difficult choices…They hurt Nevada citizens in different ways, and none of the options are good ones. But we have to balance this budget in the short term.”

New Jersey has a huge crisis with its pension plan. “New Jersey’s pension fund has lost more than $23 billion this year, dropping to its lowest level since 2003 as a collapsing financial market battered its investments, a new state report shows…The latest losses — nearly $9 billion in October, and another $3 billion so far this month — mean the fund is now worth $57.8 billion, or less than half the $118 billion in benefits it is due to pay out over time.” New Jersey’s pension plan expects an 8.25% return in 2009 and one commentator bluntly said, “That simply is not going to happen.”

Indeed, pension problems are likely occurring in many states. New Jersey invested in the market. That’s great during upturns but not so good during downturns. How many other pension bombs are out there? I’m sure there are plenty.

It’s always better to confront your problems now than to wait until later. At least in Nevada they appear to be doing that. Here in California and in the swamplands of New Jersey the blinders remain on.

Another Tax Blog

Tuesday, September 16th, 2008

And it’s a good one, too. I don’t know how I’ve missed adding Robert Flach’s The Wandering Tax Pro blog to the blogroll on the right, but that error has been rectified. Robert reports extensively on the tax situation out of the swamplands New Jersey, the Garden State.

In any case, his blog is well worth reading if you’re into taxes.