Nearly 25% of N.J. Residents Lived in Poverty in 2010

This report is more realistic than the federal standard for measuring poverty – which I believe is outright ridiculous no matter where you live in the U.S. – N.J. defines being poor as making less than $36,620 for a family of three — twice the federal poverty rate. New Jersey has a higher cost of living than most other states particularly because our exorbitant property taxes, which also reflect on rental costs.

Nearly a quarter of N.J. residents lived in poverty in 2010, study shows | NJ.com.

There are a number of factors which have contributed to this imbalance in one of the richest states in the nation. But all the factors, fundamentally, find their roots in the complicity of the two dominant political parties in holding wages stagnant and fleecing the public. In other words: A lot of people, even those not comprised in the low 25%, are making too little money and paying too much to the political octopus that rules New Jersey.

Note that the 2000 or so government entities of New Jersey devour more than 10% of the state GDP of about $650 billion. And we do not even have defense expending!

This reality has had two major consequences after two decades or so:

1. A lot of people borrowed beyond their means to maintain the illusion of prosperity.

2. Disposable income plummeted and with it went aggregate demand, thus pushing the economy into an endless period of anemic performance.

Since government – and all its local subdivisions –  also borrowed left and right, New Jersey has entered a period when the high degree of leverage has the effect of quasi paralyzing both the public and private sectors. There are budgetary problems and people are taxed out. Even if millionaires are taxed, as the democrats call for, that additional revenue would amount to considerably less than $1 billion.

The millionaire surtax has become more like a political football to keep the masses distracted and pretend that there is a major difference between the two dominant political parties. It is theatre.

The democrat-proposed increase in the minimum wage – possibly to blunt my message because I am the first who has mentioned minimum wage in the last decade – would be the first in I-don’t-know-how-many-years and it is clearly insufficient to have any economic impact.

Both parties have proposed tax reductions: Christie his ubiquitous income tax across-the-board cut, which of course favors his political base, and the democrats their property tax cut. Both plans are better than nothing; the democrat plan slightly better. But the grand problem is that the state is not in a sound enough fiscal position to – responsibly – adopt either plan.

If a tax cut – any of them – is implemented, it will amount to a tax deferment rather than a tax cut. When such tax becomes due, 10, 20 years from now, it will also come with accrued interest so we will end paying more for this meaningless relief today.

While both political parties endeavor in buttering up the voters in back-to-back election years, I am presenting  – in this website – my program of reforms, which I believe are the minimum essential to save New Jersey.

Citizens of New Jersey beware: Our problems are complex. Any politician that presents a simple solution to a complex problem is eminently dishonest.

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The New Jersey Comeback? Gone With The Wind

Fiscal common sense and sound economic policy have both taken back seats to political demagoguery. The tax cuts – whichever shape they adopt – are a mortgage on the future on New Jersey. Our difficulties are complex and require complex solutions: That means deep structural reforms in both our tax code and in the government itself.

The governor placed a public relations bet and lost. The fact is that objective economic conditions do not follow propaganda. Bombastic announcements do not belong in the realm of economics and fiscal responsibility. New Jersey is trailing the entire Northeast of the nation – with the exception of Rhode island – in almost all economic indicators and notably more so in unemployment. I have the hope that the fiscal fortunes of New Jersey may improve during the Summer with the income and sales tax receipts from the glorious Jersey Shore.

Nonetheless, the economic forecast pushed by the governor is his pony shows also known as town-hall meetings was of 7.3% economic growth for New Jersey this coming fiscal year.

That surpasses the expected economic growth of China! In what planet is the governor living in? I am sure that Christie may have no difficulty fooling some of his most gullible and sheepish supporters, but that does not mean that the wacky figures will become a reality. In view of the world economy sluggishness, there is not even hope that New Jersey could be dragged ahead into prosperity by other economies.

We have to be really smart and reform-bold to move ahead of the pack all on our own.That is what my economic program is all about: Breaking the mold; away with both Keynes and Friedman. We will borrow bits and pieces from all and put it together in a program tailored for New Jersey 2014.

Friedman, in particular, did probably more harm to the United States than the entire North Vietnamese army in a 9 year war.

Winners and Losers with Tax/Economic Reforms I Propose

Winners:

a) Anybody who works for less than $15/hr with benefits or $18/hr without benefits. Their gains are dampened somewhat by the fact that state income tax will be higher. On the other hand, they will have no sales tax and if they are homeowners they will have no property tax. If  they are renters, a payroll credit softens the impact of the higher income tax.

b) Anybody who works for a pay rate or salary above those described in (a) because the minimum wage increase will place an upward pressure on all wages. Inflation of consumer goods is checked by neighboring states as consumers would flock to PA and NY if NJ merchants increased their prices significantly.

c) Homeowners who are New Jersey taxpayers. They will only face the general income tax which is proportional to income. Seniors in particular are among the principal beneficiaries. In cases where a NJ resident works outside New Jersey and does not pay NJ income tax, a prorated portion of the property tax remains in effect.

d) All corporations, regardless of type and size, and professional employers who have employees in the State of New Jersey will not only enjoy zero tax on their earnings but they will pay no property taxes in their sites. Some rural areas of the state may be excluded from this policy as a conservation barrier. Same applies to limited partnerships and limited liability companies (which could be C or S corporations as well.)

e) Farmers and landowners. Absence  of property tax will ease the burden of holding on to large tracks of land.

f) Merchants of all types. Lack of a sales tax and higher wages should increase demand, drawing consumers even from outside New Jersey if New Jersey merchants maintain level prices.

g) Investors, regardless of income, who invest in New Jersey or in corporations which operate in New Jersey would see zero tax rate on their dividend and capital gains. Dividend and capital gains from New Jersey receive “Most Favored Nation” treatment.

About Even

h) People who rent. Generally speaking, the reforms are inclined to stimulate home-ownership. Income tax increase is almost balanced out by automatic payroll deduction (which is paid by rental property taxes) and elimination of sales tax.

i) Owners of residential rental property. Until we design a better method, property taxes will continue to be in effect.

Losers:

j) Investors whose dividend and capital gains are earned in operations not present in New Jersey. By far the biggest losers here although retirement accounts are exempt and there is a threshold (to be determined) below which such dividend is treated as regular income.

k) Land/homeowners who are not New Jersey residents and taxpayers. Their property tax rates are very likely to increase.

l) Career politicians. There will be many less public positions available for them once they get out of political office.

Note that there may be exist niches not included in the compilation above. For instance, some workers of current local boards of education could be displaced as result of consolidation although the number could be much smaller than expected. Another example is commercial rental property: If it is occupied, there will be no property taxes on it but if it is vacant, property taxes will apply.

Summer Wave of Foreclosures?

They are like two weather fronts approaching which may create a perfect storm in New Jersey: The courts have lifted the restrictions on foreclosures and more than 14% of all homes in several central counties of New Jersey have underwater mortgages (more is owned on them than they are worth.) That is a whopping 79,000 houses and the counties mentioned are Somerset, Middlesex, Monmouth and Ocean. Although I do not have the data at this moment, it is safe to reckon that the rest of the counties have at least a fraction of the numbers quoted above. New Jersey could have as many as 150,000 homes in danger of being foreclosed this year.

Central Jersey homes face rising tide of mortgage defaults | MyCentralJersey.com | MyCentralJersey.com.

The magnitude of the crisis is accentuated by the high property taxes in New Jersey. The combination of underwater mortgages and high taxes make  people default, even those who can afford their payments. For some it is a business decision. How bitter may that be! Property taxes can be like a second mortgage.

Abolishing property taxes as I propose would eliminate that latter factor.

Perhaps the facts that I am campaigning on a program of rationalising the government structure in New Jersey and that November 2013 is not too far are awakening politicians to “consolidate” and “sharing services” in an effort to salvage their monopoly on power.

Donovan says home rule is costing Bergen too much : page all – NorthJersey.com.

Bergen County Executive Donovan is not the first one of course. Christie did it. So has Sweeney. Ironically, no politician calls for “consolidating” his/her own position. It is always somebody else who is sacrificed. However, the most important fact that we must keep in mind is that all these calls are not genuine or rather are not bound to produce any results of sufficient magnitude to benefit the people of New Jersey. It is all theatrics, propaganda, and throwing a few crumbs to appease the popular anger and to blunt my message of reform.

They are scared because reform can happen. Other states, where the political machinery is not as entrenched as it is in New Jersey and where some politicians put the public good above partisan privilege are showing the way as you all can see below; the case of Maryland.

Md. budget would tip balance of power, giving state more say in education – The Washington Post.

Maryland is taking the tax money that goes to counties and distributing it directly to schools. Maryland may not have the same system of home rule that New Jersey has. We may have to do this through a constitutional amendment, But we certainly can do it here and save our own future and that of our children. The two selfish political bureaucracies have absolutely no right to ruin the lives and well-being of 8 million New Jersians.

Expect a formidable resistance to reform here too.

New Jersey Debt Grew by 3 % Last Fiscal Year to $38 Billion

N.J. debt grew by 3 percent over past fiscal year to approach $38 billion | NJ.com.

It is not so much what Christie is doing but rather what is not doing; what none of the previous governors did, and what no governor from the two dominant parties will do:

Overhauling our political and taxation systems to spur economic growth and trim the size of government in the areas where it does no public benefit but simply feeds the political class.

The $38 billion do not include many of the independent authorities obligations, or municipal and counties debt, or public pension liabilities. It is simply the bonds sold by the State of New Jersey.

Healthcare Drives Private-Sector Employment in New Jersey

NJ Spotlight | Healthcare Drives Private-Sector Employment in Garden State.

And that is not a healthy situation at all. An economy with a single sector growing is moribund and the lack of a coherent economic policy by the state government is clearly at fault.

The growth of the New Jersey economy in tightly knit with the political and tax structures of the state. Unless we reform the latter, our situation will not improve in any significant way.