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