Category: Government/Politics

We all know that “temporary” tax increases have a tendency to become permanent. At the time they are first imposed, their proponents deny that they are really tax increases at all because they are only temporary, justified as necessary for some particular, presumably equally temporary, economic condition. Then, when the temporary increase is made permanent just as it is supposed to expire, the proponents again deny that there is really a tax increase: the temporary increase is just being made permanent. Despite there being no tax increase on the front or back end, taxes have in fact been raised, but no one is responsible. Now suppose that the temporary increase is allowed to expire; that is criticized as a tax cut.

The constant refrain of those who wish to have the government be in charge of spending more of your money is the claim that “the rich” do not pay their fair share. We know this because they have some left. The view that others should pay more taxes so that we can get more benefits is exactly what I talked about almost two years ago as the “SEP Problem;” which means that “someone else is paying.”((Charity is indeed a virtue, but is it really charity to give other people’s money to the poor?)) This view is reflected in Tom Moran’s recent editorial “Murphy’s temper tantrum, and the makings of a budget deal” (subscriber exclusive).

Moran begins by describing mansions in Montclair((Opinion pieces, whether labeled as such or not, often begin by personalizing the argument; either by introducing a sympathetic person who would be benefitted by the writer’s position or vilifying those who would be hurt.)) and asserting that their owners should not qualify for StayNJ, Assembly Speaker Craig Coughlin’s proposal to provide a property tax credit/rebate for senior citizens with no income limit for eligibility.((This proposal is discussed in my two most recent posts: Plan to Cut Property Taxes for Senior Citizens Seems like an Expensive Gimmick and StayNJ Details Revealed: It Is a Gimmick.)) Moran cites as support for his position none other than well-healed Governor Murphy, whom he quotes as saying, “I don’t think we should be in the business of giving the likes of me tax breaks.”

Moran then pivots to say that Murphy is in fact giving the rich (personified as Jeff Bezos, the Amazon founder and multi-billionaire) a tax cut because Murphy insists that the 2.5% corporate tax surcharge imposed in 2018 should be allowed to expire at the end of the year, almost as promised. (The surcharge has already been extended once, among the many things blamed on COVID.) Moran’s point is that the the temporary tax increase should be made permanent and used to fund a means-tested tax subsidy.

What about the promise that it would be temporary? “[Murphy’s] promise in 2018 does not obligate the Legislature of 2023 even one bit.” Legally correct, which only strengthens the view that voters should NEVER rely upon the promises of politicians. They have no credit because there is no obligation to keep their word.

Jay Bohn

June 1, 2023

Last week I noted that New Jersey Assembly Speaker Craig J. Coughlin was proposing a scheme he called “StayNJ” which would, he said, “effectively cut most seniors’ property taxes in half.” (emphasis added) At the time actual details of the plan were not available, but I was skeptical that it was just a one-shot deal intended to keep Democratic majorities after the upcoming election. Now that some details are available, I still believe the policy to be a gimmick.

Yesterday NJ.com reported (in a subscriber exclusive) that the plan would provide a 50% credit directly on seniors’ tax bills, capped at $10,000, starting Jan. 1, 2025, with no income limit on eligibility. So, as I suspected, it is not actually a tax cut. No government agency is going to have to reduce its spending. Rather, taxes collected at one level will be used to subsidize taxes which will not be collected at another.

Remember the homestead rebate? When I first moved to New Jersey, property taxpayers would receive a check from the State conveniently near election time. How much was always part of the summer budget negotiations. Then someone decided that sending checks to individuals was too expensive, so now the rebate (when there is one) appears as a credit.((I have two big issues with the new system. First of all, as the eligibility is partially based on income and age, and the status of property tax payments is properly public information, privacy is compromised. Second, as the benefit of the credit follows the property, special arrangements must be made if the eligible taxpayer sells the property between the time of application and the time of receipt of the benefit. These same issues will apply to the StayNJ program.)) StayNJ will become part of the annual budget circus and there will come a time when the 50% is reduced, an income limit is imposed, or the government will say that we just cannot afford it this year because those pesky millionaires insist on keeping some share of their income.

The other news is Governor Murphy’s reaction to Speaker Coughlin’s proposal: he is so much against it that he would shut down State government if necessary to prevent its passage.((In a letter to the editor, I point out that the article reporting the reaction (another subscriber exclusive), continues the practice by the Star-Ledger and NJ.com of criticizing former Governor Christie “at every opportunity, fair or not.”))

As I mentioned before, all the sudden concern for senior citizens uses age as a proxy for ability to pay. StayNJ makes income taxpayers (where there is some relationship to ability to pay) subsidize property taxpayers based upon this assumption. Why should ability to pay matter for senior citizens but not younger property taxpayers? As I said before, “I believe that school funding (and just about everything else involving the running of schools) should be handled by the state and strict limits to the remaining spending supported by the property tax should be imposed.”

Jay Bohn

May 29, 2023

In a recent guest column, New Jersey Assembly Speaker Craig J. Coughlin said: “It’s time to cut property taxes in half for seniors in New Jersey.” He calls his plan “StayNJ” and says StayNJ “will effectively cut most seniors’ property taxes in half.” (emphasis added)

Okay, so it’s not actually a tax cut; more likely it’s a new or replacement rebate scheme, with no guaranty of funding beyond its first year, by which it will (or will not) have accomplished its principal objective, continued Democratic majorities in the State Legislature. It is not clear who is a senior citizen and what criteria will be used to determine who does and does not qualify. We don’t know because his bill has an impressive number, A1, but as of this writing the text is not available.

While cutting taxes for senior citizens sounds good at first, let’s think about why that class should be favored. Either age is used as a proxy for ability to pay or there is the thought that by age 65 (or whatever the favored age is set at) they have “done their bit,” particularly in paying for schools.

This latter observation reminds me of a comment I made last year:

“Everyone wants to reduce property taxes. Unfortunately, the suggested “solution” is often replacing property taxes with some other tax, essentially taking from a different pocket, hopefully of someone else’s pants.”

Governor Murphy’s budget proposal includes a surplus of $10 billion (derived from COVID aid and increased revenues from COVID-spawned tax increases) and that money is, to use the familiar metaphor, burning holes in the pockets of legislators of both parties. Instead of preserving the money against leaner times (and the State treasurer recently reported tax collections 14% below projections) or using it for necessary capital projects (no, not the New Jersey Hall of Fame, but remember during the pandemic when it was reported that the computers running the unemployment system used a decades-old programming language?), they see the short-term political value in bribing voters.

Jay Bohn

May 25, 2023

The so-called news aggregators, websites that repackage articles that appear elsewhere with their own advertisements, do provide a greater variety than many news sites, and I have occasionally found an interesting piece there that I would not have seen elsewhere.

Recently I came across an article((I first saw it on MSN, then traced it to the original article on Moneywise.)) about new IRS requirements for the reporting of online transactions. The threshold for the reporting requirement has been reduced so that the IRS will now be told about more transactions. As far as I can tell, this change requires the online sites to report more transactions so makes it more likely that the IRS will know about a taxpayer’s online sales, which the taxpayer already was required to report (and pay taxes on) anyway. The new requirement does not actually increase the scope of taxation, but it will make it more likely that the IRS will be able to identify those who evade taxes.

The internet has made it easier to run a business, so much so that some perhaps don’t realize that they are. If you rent a brick-and-mortar storefront, stock merchandise, and sell to customers who come in, it’s pretty hard to argue that you are not running a business. But, if you create a graphic on CafePress and set up to sell t-shirts and coffee mugs and let the website handle orders, payment, and shipping and simply receive your cut periodically, maybe there’s plausible deniability. In the online world “virtual” is still real and, to the point here, taxable.

Some of the e-commerce websites that make their money by providing the virtual storefronts for these businesses formed the Coalition for 1099-K Fairness, which has a slick website advocating against the expansion of the reporting requirement. Their rhetoric is all about the impact upon “casual” sellers, but I’m pretty certain the motivation is on their own bottom lines (not that there’s anything wrong with that) as it will discourage some sellers from participating in the marketplace and will generate compliance costs for preparing, submitting, and distributing the 1099’s.

The Coalition’s primary argument is bolded on its front page: “Millions of Americans have sold an item online, and many of these sellers use those funds for critical needs such as food, medicine, and bills and are not running a business.” The use of the revenue from online sales is no more relevant than the use of income from a job and they are not suggesting that employers should not have to issue W-2’s.

Remember, the new rule does not expand the scope of what is taxable, but the increased reporting requirement will move many of sellers out from under the table. Just as a side job is not tax free, so a side gig with a virtual storefront may still be taxable.((Even in my day job as an attorney I do not give tax advice, but those using e-commerce sites to sell their own used goods for less than they paid for them are not facing the prospect of paying taxes on the transactions, although some explanation may be required.))

Jay Bohn

May 22, 2023

In yesterday’s Star-Ledger, its Editorial Board printed an opinion titled “On congestion pricing, New York is Right.”((The editorial also appears as a subscriber exclusive on NJ.com under the title “On congestion pricing, New York is right, NJ is wrong.” I note that “New York” is spelled out but New Jersey is only identified by initials.))

Under congestion pricing New York will charge drivers to enter the central business district (south of 60th Street) ostensibly to encourage and subsidize mass transit. Lots of details still to be worked out (or at least publicly revealed).((There is a pretty good explanation of everything here.)) Much of the money will be paid by New Jersey residents for the privilege of working in, and paying taxes to, New York. All of the money will be spent by New York.

Not only is this another example of New York getting the better of New Jersey every time((See Paul Mulshine’s column on that topic here.)) but also of SEP((I introduced the concept of “someone else is paying” in a post almost two years ago.)) increasing the effective demand for whatever the funds wil be used for.

Jay Bohn

May 15, 2023

The House of Representatives is considering an amendment to the Constitution that would limit the terms of members of Congress. H. J. Res. 11. The Twenty-Second Amendment already restricts the number of times a person can be elected President. In many States a two-term (or at least two consecutive term) limit is standard.

Many good government advocates believe that term limits are good for democracy, but I’m not so sure.

Rather, I believe that term limits (and all but the most basic legal qualifications for office) limit democracy by reducing the choices that the people can make. It is common, but not universal, to require would-be legislators to reside in the district they seek to represent. One the one hand this is fully understandable, but on the other, perhaps the non-resident is really a better candidate. I’d rather have us be able to elect a non-resident than encourage carpetbagging.

Jay Bohn

May 8, 2023

Unless you are completely oblivious to national news, you may have heard that former President Donald Trump is currently on trial in civil court for sexual assault and defamation. E. Jean Carroll accuses Trump of raping her in New York City’s Bergdorf Goodman department store in 1995 or 1996. He has denied the event and these denials form the basis of the defamation claim. I wasn’t there and I have no particular insight on the truth of the charges, but I am really perplexed about the decisions that Trump has made in how the case is being tried.

Donald Trump is running for President (again — how I wish he wouldn’t). With any other candidate you would think that the prospect of being found by a jury to have raped someone would be an existential threat that would call for the most vigorous defense. Yet, although Trump has denied the accusation in various public statements, he is not going to testify at the trial to deny it under oath. Moreover, his attorney announced yesterday that when the plaintiff rests, he is not going to present a defense.

True, he’s not going to jail over this, and he has a hard core of followers for whom it would not be disqualifying even if he admitted to the assault, but if he really didn’t do it, why not tell the jury so? It makes one wonder if the denial would be perjury.

Jay Bohn

May 4, 2023

Last August I wrote about the Forward Party that includes former Governor Christine Todd Whitman among its founders. I had entirely missed the forming of another third party, the New Jersey Moderate Party. The Moderates’ path to electoral success relies upon what it calls “fusion” voting. Essentially, the party is going to endorse either the Republican or Democratic candidate for an office and wants to have that candidate’s name appear on its line as well. In that way a disaffected Democrat who can’t stomach voting for a Republican (or vice versa) can pretend not to by voting for that candidate as a Moderate. The problem with this scheme is that it is not permitted by New Jersey’s election law, which prohibits a candidate from accepting more than one nomination.

Knowing that to be the case, the Moderate Party filed its nominating papers for then Representative Thomas Malinowski along with an extensive brief and other documents seeking to have Tahesha Way, New Jersey’s secretary of state (the chief election official), declare the anti-fusion statute unconstitutional. When she refused to do so, the Moderate Party and three of its members appealed that decision to the Appellate Division of the Superior Court (which has jurisdiction to review the final decisions of administrative agencies).

Maybe you’ve heard of what the media has taken to calling the “rocket docket” of the U.S. Supreme Court, those cases that arise suddenly with a great clamor that justice demands an immediate decision (usually the granting or vacating of a stay). The Moderate Party appeal was initially going to be considered on an accelerated basis because without a decision in the appellants’ favor in time for the ballots to be printed, the case would be moot. When it became clear that there would be no decision in time to allow Malinowski the benefit of a second line on the ballot, all parties agreed to deceleration of the appeal and both sides sought and obtained extensions of time to file their merits briefs. Recently the Secretary of State and the Republican Party, who intervened to defend the statute, filed motions to dismiss the appeal or to transfer the matter to the Law Division for the creation of a record, rather than file their merits briefs.((In a Star-Ledger guest column published last Sunday, and on NJ.com under the title “Whitman & Torricelli: Why we need a 3rd political party in New Jersey“(paywall), its authors indicate that the case is pending in the Supreme Court (not yet as far as I can tell) and will likely be decided in the next several months (don’t hold your breath).))

This post is not intended as a full-scale analysis of the merits of the Moderate Party’s appeal. Rather, I want to express my thoughts on the assertion that the First Amendment (the Free Speech Clause in particular)((See my prior posts Free Speech is a Bitch, Free Speech, but Not for All Ideas, and Freedom of Religion, As Long As You Agree With Me for my views on Free Speech.)) is appropriately cited to challenge regulations of voting mechanics. While in one sense voting is the pinnacle of free expression, it also has a specific purpose vital in a democracy: it selects those who will govern the rest for the next little while. The voter cannot be punished for the tenor of the vote. So long as the ballot is properly marked and no more candidates are voted than permitted, the vote is counted. But the voter does not get to write an essay explaining and justifying the vote and require that the returns report it. The vote is the vote, the why doesn’t change it. This is my problem with sentiments, such as expressed by William Kibler, one of the appellants, in his guest column “I’m suing New Jersey because I shouldn’t have to vote for a Democrat or a Republican” (again, subscriber exclusive) in which he says fusion is necessary to avoid “forc[ing] people to associate with a major party in order to cast a meaningful vote.” But giving one of the candidates already on the ballot an additional line with a different party affiliation does nothing to add any perspectives to the ballot. The cross-endorsed candidate still has the same positions.

Jay Bohn

April 27, 2023