Repeal the income tax and provide quality education

By Professor Murray Sabrin

In a recent Star Ledger column conservative pundit Paul Mulshine argues that Gov. Phil Murphy’s proposal to increase the income tax to 10.75% for individuals making more than $1 million a year so he can hike property tax rebates is terribly flawed.  Right on. 

The property tax rebate would only available to a senior homeowner or a disabled citizen making no more than $75,000 annually.  In New Jersey that would exclude a substantial number of homeowners, even those who make $75,001. 

New Jersey's income tax, which was enacted at the end of Gov. Brendan Byrne’s first term in 1976, although politically unpopular, set the stage for the governor to send out property tax rebates in 1977 just before his reelection.  In short, the governor deftly used homeowners’ own money to bribe them to win a second term. This is a classic example of democracy in action – – fooling people that they're getting something from the state, when in fact what the state was doing was taking money from the people’s one pocket and putting it in their other pocket.

The current debate over hiking income taxes on millionaire earners and increasing property tax rebates underscores the fundamental issue that both political parties are unwilling to address, namely how education should be funded and who should pay for it.

Although the state Supreme Court effectively imposed the income tax on the people of New Jersey, because the New Jersey Constitution calls for the state to provide a "thorough and efficient education" to all students especially in urban school districts, with the promise of property tax relief, the more than four decade experiment in the income tax has been a colossal failure. 

The first question that needs to be tackled is who is responsible for a child's education?  In a free society that means parents using all the skills and tools and resources at their disposal would educate children up to a certain point, when schooling would become more appropriate. 

The current model of public—compulsory--education is nearly 200 years old.  At one time public schools did a relatively outstanding job of teaching youngsters the 3Rs so they could become productive and financially independent individuals.  Under the auspices of so-called educational experts, social justice cultural warriors and massive political interference, especially from the federal government, public schools have become “politically correct” institutions for the past several decades.  In addition, the cost of public education in New Jersey has skyrocketed well above the rate of inflation since the income tax was enacted more than four decades ago.

The results in New Jersey urban school districts, where the cost of education rivals that of elite private schools, have been abysmal. Unfortunately, the clamor for more taxpayer dollars to prop up the expensive and relatively ineffective urban school systems needs to be questioned.

The lessons of the past four decades regarding funding New Jersey public schools should be obvious to any objective observer. First, the income tax should be repealed.  Two, teachers and parents should create nonprofit educational organizations in their communities to provide high-quality education to youngsters from K-12.  In addition, school property taxes should be repealed as well. There is absolutely no compelling reason for taxes to fund education.  Funding would come from fees, tuition, grants and other voluntary means.

The assertion that education is a "collective" responsibility is a bogus proposition. If this assertion is true, then the state should not stop at education but provide healthcare, housing, transportation, supermarkets, entertainment, and all other goods and services that people want.  In other words, is socialism the answer as Bernie Sanders and Rep. Ocasio-Cortez assert? 

Socialism is not the answer whether in education, housing, transportation, medical care and the dozens of other programs that all levels of government currently fund.  In a free market both the nonprofit and profit sectors would provide all the goods and services the public wants. That has been the history of America for more than 200 years.  But government has co-opted the free market for decades. 

Gimmicks like property tax rebates to soothe the pain of income taxes are counterproductive. The state income tax has become a political football and avoids the most important question in our society: what is the role of government in a free society?

With another financial crisis on the horizon as the current "everything bubble" will burst in the not-too-distant future, it is imperative that we look at the big picture, how can we create a free and prosperous society with an educated young generation without an income tax?  This is the debate that should be front and center in Trenton.   

Murray Sabrin is professor of finance at Ramapo College and author of the forthcoming, Why the Federal Reserve Sucks: It Causes Inflation, Recessions, Bubbles and Enriches the One Percent.  Sabrin was recently interviewed about his new book, http://www.sanfranciscoreviewofbooks.com/2019/05/cottogottfried-does-federal-reserve.html#more

The GOP is the natural party of suburban New Jersey.

Matt Rooney is right.  The Democrats’ “unwillingness to end the redistribution of funds from the suburbs to failing urban schools remains the single biggest driver of our state’s nightmarish, neighborhood-killing property taxes.”

The Democrats could – and should – be challenged on their cruel insistence that economically distressed families in suburban and rural New Jersey be made to subsidize rich corporations and wealthy professionals in places like Jersey City and Hoboken.  The tax breaks with which urban Democrat bosses favor contributors to political campaigns are paid for with subsidies from struggling communities throughout New Jersey. 

There is more than enough corporate and professional money in urban New Jersey to cover the education of the children who live there.  If those interested parties were made responsible for the children of their communities the educational systems there would be subject to a greater degree of local oversight and on-the-spot scrutiny by those stakeholders.  Absent that, under the current system of subsidy from afar, those subsidized stakeholders are more than content to allow political corruption to flourish, just so long as they keep getting their discount. 

It is shameful for One Percenters like Phil Murphy, Steve Fulop, Lacey Rzeszowski, and Saily Avelenda to don their pussy hats and try to argue that their tax breaks are about “helping poor children”.  Not when their “philanthropy” is paid for by over-taxed, working class families trying to stay out of foreclosure. There is nothing LIBERAL about screwing over working class families to pay for propping-up corrupt urban political machines. 

As far back as the administration of Governor Jim McGreevey, the Democrats knew that half of the state’s economically disadvantaged children lived outside the over-funded urban Abbott school districts.  More than a decade has passed since the state Supreme Court issued its report on this – and NOTHING has been done to overturn the fundamental unfairness of the state’s system of funding education. 

Since the economic crash of 2008, suburban and rural poverty has grown in New Jersey and throughout the United States.  That’s what the liberal to centrist Brookings Institute has argued in their published studies.  Brookings’ experts also note that, since the 1960’s, most of the nation’s anti-poverty programs have been aimed at the cities.   

Rural and suburban New Jersey lack even the basic infrastructure to help get people back on their feet – on top of which local municipalities are robbed of the property taxes that could help with this.  Everything is taken from them – in the name of the urban poor – but for the use of the One Percent and the corporations they control. 

Corrupt urban political machines, corrupt vendors, rich corporations, and wealthy professionals all make out under the Abbott regime.  The genuinely poor remain trapped in schools that, for all the money spent per pupil, fail to educate their students or prepare them for the working world.  The kids are used as pawns, as an excuse, for the corruption and those getting rich from it.

More than a decade ago a prescient writer by the name of Paul Mulshine argued that the life of every child mattered and that the state needed to provide a uniform baseline of funding.  Instead, the Democrats have ensured that the money continues to miss those poor children living outside the Abbotts, while failing to help those living within the Abbotts. 

The question is, will those currently charged with leading New Jersey Republicans into their next battle recognize these stark facts starring them in the face?  Will they make use of them?  If not for their own political ambitions and those of their party – Republican leaders should be urged to do so on behalf of over-taxed working people, their children, and for the child pawns being used but not served.

New Jersey Republicans face extinction.  Their fighting prowess is minimal.  It has reached the point where any plausible Democrat candidate with a modicum of funding can expect to simply march in and take most of their remaining legislative seats.  Not in Northwest New Jersey mind you, where every Democrat on the ballot was just ruthlessly slaughtered and where the Democrat who challenged Senator Steve Oroho in 2017 lost her school board seat.  This is where the pussy hats run into a phalanx of flannel shirts (and those are the women!).  

In his column (https://savejersey.com/2018/11/n-j-republicans-are-letting-sweeney-appropriate-their-strongest-argument-rooney/), Matt Rooney raises the question of whether Assembly Republican Leader Jon Bramnick is up to the task of fighting the Democrats next year.  Whether he is a “wartime consiglieri” or not.  We hope that he is, but at the present, he appears to be more concerned about how he is perceived within the “bubbles” of Trenton and Westfield (whose median income is double that of Sussex County). 

Assembly Leader Bramnick would do well to break out of this bubble.  “Bubble land” doesn’t understand America.  It is too rich, too privileged, too unconcerned with the basics of shelter and debt to worry about those who are.  Bubble land never understood the rise of Donald Trump.  Never got the levels of pain and disappointment that the eight gray years of Barack Obama brought to those working class people who voted for him in 2008.  They put it down to “racism” when it was really about the threat of foreclosure – of losing… everything.

We urge Jon Bramnick and the other leaders of the NJGOP to embark on an experiment in listening and learning.  Not the usual photo-op in Newark… go to where the new poverty is.  Visit a food pantry in what everyone thinks is a middle class town.  Watch the people who once had a good job, with benefits and a pension, but who now work three without.  Notice the high priced automobiles, now over a decade old.  Drive around and take note of the “for sale” signs.  Visit an encampment of working people who have lost their homes.

This isn’t a time for rallying around a corrupt Establishment that – uses poor people as an excuse to rape working people to make rich people richer.  No matter how you personally feel about the Democrats responsible, these are bad policies and they must be challenged.  The choice must be one of clear-blue-water between the parties.  Again, if not for your own political ambitions and those of your party, do it for the over-taxed working people, for their children, and for the child pawns being used but not served.

Matt Rooney makes the point very clearly:  “Taxpayers want an advocate… not a mediator.”  Amen.

ICYMI: Mulshine explains the gas tax

Paul Mulshine is New Jersey's top conservative columnist.  He writes for the state's largest circulation newspaper.   

The 23-cent gas-tax hike: Pigs will fly before the opponents find an alternative.

By  Paul Mulshine | The Star Ledger

October 06, 2016

The weather was sunny with a light breeze outside the Statehouse Wednesday after the state Senate took a key vote on a package that would raise the gas tax by 23 cents a gallon.

It was perfect flying weather for pigs.

My reference is of course to that fabled Statehouse rally in 2008 at which a talk-show host from NJ 101.5-FM presided over the release of hundreds of flying-pig balloons to protest a prior attempt to bail out the Transportation Trust Fund.

That was then-Gov. Jon Corzine's  plan to generate billions by having the toll roads run by a state-owned hedge fund that would bond against future toll hikes.

"Pigs will fly over the Statehouse before there's a realistic level of new taxes or spending cuts that can fix this mess," Corzine told the legislators as he introduced his scheme.

But the plan came crashing down to Earth when drivers learned that it called for tolls to eventually rise by800 percent. 

When those balloons rose over the Statehouse, the plan was dead – laughed to death by the voters. So score one for the guys at 101.5-FM.

But if we weren't going to fill the hole in the TTF with toll money, just what source of revenue could we use?

On that score, the talk-radio guys are all talk. The guys at NJ 101.5 have become the loudest opponents of the gas-tax hike.  But a lot of porkers will have to turn into pilots before the critics can come up with a good alternative for funding the TTF.

The three main objections to this plan simply don't make sense.

The first, which is repeated like a mantra among the radio talkers, is "It's too much money" or some variant thereof.

No, it's not. If they had implemented this tax hike when it was first proposed earlier in the year, drivers would have forgotten it by now. There would still be stations charging a bit over $2 a gallon. A few years ago we were paying almost $4 a gallon.

We survived.

Another objection is that the total package is slanted in favor of that group that liberals love to demonize: "the wealthy." The Sierra Club is one of many liberal pressure groups making that point.

"We believe in a plan to fix the TTF with a gas tax, but this would be on the backs of the middle class by tying it to two other tax cuts that benefit the wealthy," Sierra's Jeff Tittel said in a release. "This plan is a complete sellout to working families and will give a huge tax break to the wealthy."

One part  of the plan is the elimination of the estate tax, which now kicks in at the $650,000 level. The plan would eliminate taxation on pension income up to $100,000 a year for a couple.

Given the cost of living here in Jersey, that would include a lot of the middle classas well as thewealthy.

But the more the merrier, I say. So does state Senate President Steve Sweeney. The South Jersey Democrat teamed up with Republican Gov. Chris Christie to push the bill, which passed the Senate yesterday on a procedural vote and is expected to win final passage in both houses Friday.

Sweeney said those cuts will help keep people home after retirement.

"Those are the people who get up and move to other states," he said. "We recently had one person, David Tepper, leave and it cost us $100 million."

Tepper is the billionaire hedge-fund manager who moved himself and his business to Florida. He didn't cites taxes as the reason, but plenty of other retirees become legal residents of Florida to escape our taxes.

Oroho said his fellow financial planners have no choice but to inform retirees Florida's the best option.

"We're losing income. We're losing wealth. We gotta be competitive," he said.

Then there's the third objection. Some critics of the package argue against it on the grounds that the TTF will still have to keep borrowing even after the gas-tax hike.

That's regrettable, said Oroho. In a perfect world, we would be able to put the TTF back on the pay-as-you-go basis that existed after Gov. Tom Kean last hiked the tax in 1988.

But ensuing governors just kept borrowing money rather than raise the tax a few pennies. Now we're so far behind that returning to pay-as-you got would mean some real pain at the pump.

"If you wanted to pay off the current debt plus have no future debt,  then you'd have to raise the tax by almost a dollar a gallon," Oroho said.

Or in other words, if we want to fix this mess we don't need a flying pig.

We need a time machine.

Unless the critics have one stashed somewhere, they need to accept the inevitable.

ADD - THE REAL MISTAKE: The real mistake the Trenton crowd made was to fail to index the gas tax for inflation back in 1988. Pegging it to the price of a gallon of gas did not account for the time value of money. If it had been pegged to inflation, the tax would have slowly rose from 14.5 cents a gallon to 30.5 cents a gallon.

No one would have even noticed such a small hike and the trust fund could have remained solvent. 

Instead we had the usual gutless politicians of both parties who were glad to borrow the money while pretending to be responsible by not raising the tax.

That's what got us into this mess. Judging from the comments, you readers fell for it.