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Marxism, New Jersey Style

Last Saturday between 2,000 and 3,000 people (depending on media accounts) descended upon the State House in Trenton to protest upcoming budget cuts. The rally, sponsored by the "Fairness Alliance", was organized to pressure the legislature and Governor McGreevey to support a "millionaire's tax".

The alliance proposes a three-year "temporary" hike of the top state's gross income tax rate (now 6.37%) on families earning between $400,000 and $600,000 (to 7.5%), between $600,000 and $1 million (to 8.5%), and over $1 million (to 9.5%). Higher rates for single filers would kick in at $250,000, $300,000 and $500,000. All told, the tax increase would affect about 50,000 households, nearly 2% of all New Jersey's taxpayers.

According to the alliance's analysis of the state's 2001 revenue figures, the three-year "temporary" hike would bring in $972 billion to the treasury's coffers.

(As Milton Friedman once said, "There is nothing as permanent as a temporary government program". A temporary tax hike would be permanent. Bet on it.)

The plan also calls for reducing taxes on low-income New Jerseyans by exempting from the state income tax families making under $25,000 a year and individual filers making under $15,000. According to an alliance press release, the exemption would eliminate state income tax for more than 230,000 households, almost 9 percent of all filers, at a cost of $41.7 million.

Jon Shure, president of New Jersey Policy Perspectives, a liberal think tank, said at the rally, "We need a millionaire's tax in New Jersey to recapture the windfall. It's a 2 percent increase for just 2 percent of the households in New Jersey. The ones who've gotten the most back from state income tax cuts so far. The ones who've gotten the most back from federal income tax cuts so far. ... These are the people who the budget cuts hurt the least."

The "windfall' Shure refers to is the tax reduction upper income families will receive under the tax bill recently signed by President Bush. So, according to Shure and his allies, upper income taxpayers--who have worked hard to get this far in life--must not be allowed to keep a substantial portion of a federal tax cut because the State of New Jersey's bloated budget needs more money to redistribute to seemingly endless special interests.

The alliance claims that the higher state income tax hikes, which are deductible on taxpayers' federal income tax return would mitigate the temporary state tax hike. However, the alliance's analysis omits a very important fact, namely, the federal Alternative Minimum Tax would kick in for these taxpayers, and thus their higher state taxes would not be deductible, or, at best, substantially reduced. Oops.

The alliance's proposal calls for the top gross income tax rate to go from 6.37% to 7.5%. That's not a 2 percent hike, as Shure misleadingly repeats over and over in the press, but an 18% tax hike.

There is more. The tax hike on families earning between $600,000 and $1 million would face a 33% tax increase, while families earning more than $1 million would see their taxes increase by a whopping 49%.

Whatever the net tax impact on upper income households of the Fairness Alliance proposal, it is certainly not the "2 percent hike" that Shure has been asserting in the media.

Meanwhile, Herbert Greenberg, president and CEO of a Princeton based firm also spoke at the rally and drew cheers from the crowd when he said," We've gotten a lot back and we don't need it….A few thousand dollars more is not going to affect my quality of life".

Mr. Greenberg also stated that he knows that there are many more upper income earners who feel like he does: Tax me more. Mr. Greenberg and his wealthy pro-redistributionists do not have to wait for a tax hike in order to be plundered, they can send in any amount of money to Trenton right now. In short, Mr. Greenberg, et. al., can "tax themselves" as much as they want to. Nobody is stopping them from increasing their financial support for the State of New Jersey's budget.

What are you waiting for Herb? Send your check to Governor McGreevey. He will appreciate it.

The news accounts of the rally had a common thread. The voices at the rally sounded like a 1960s left-wing hippie get together: "We demand more money from the state to fund our interests".

From so-called affordable housing groups, to public education monopolists, to social workers, and other individuals who toil in the belly of the welfare state, the players may have changed in nearly 40 years since the Great Society was launched, but the rhetoric remains the same.

As Peter Drucker, probably the greatest social analyst of the last half-century and the father of modern management practices, keenly observed more than a decade ago in a Wall Street Journal essay, "government has proved incompetent at solving social problems. Virtually, every success we have scored has been achieved by nonprofits. In addition, according to Drucker, " …a well-managed nonprofit gets at least twice the bang out of each buck that a government agency does".

So why do so many intelligent people still cling to the failed policies of the welfare state, in spite of the evidence that government is the least efficient deliverer of social services?

The short and simple answer is that many intellectuals, public policy types, politicians, media pundits, and others have internalized the ethos of Marxism. And in New Jersey, the Marxist ethos is so ingrained, nothing less than an intellectual revolution is needed to overturn decades of collectivist brainwashing.

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