Gelinas has no idea what she is talking about. As I have noted countless times, the entire state income tax is dedicated to one purpose and one purpose only:
Property-tax relief.
The sole purpose of the tax is for Trenton to send it back to the taxpayers from which it comes to offset their property taxes.
...
Quite obviously the best thing to do with the income tax - other than eliminate it entirely - would be to put every cent of it into tax credits that go directly to the homeowner to be applied against his property-tax bill.
Mulshine's point is legal and political, not economic or fiscal. Since legalisms and politics don't balance budgets, it's irrelevant.
But this strategy was never going to constrain taxes, either at the state or the local level. Economic reality holds that when you subsidize something, you get more of it.
With its income tax, New Jersey has subsidized local property taxes -- and, thus, unsurprisingly, the state has gotten higher property taxes.
The only way to cut local property taxes for good is to cut local spending. Christie has started to do this work, but it's way too early to declare victory.
Sending out higher state checks to property owners to mask growing local spending won't aid in this work, but will hinder it, as it alleviates political pressure on local governments and on Trenton to cut local spending.
Anyway, practically speaking, New Jersey is so far in the pension hole, thanks to skipped pension contributions owed for past work, that if it happens to find extra money lying around, it should be spending many of those found dollars on plugging past pension liabilities.
Otherwise, everyone's taxes are going up when the pension bills come due, making the whole question moot.
Mulshine accidentally demonstrates one of the points in the Post piece. The Post op-ed notes of the proposed supersized property tax rebate that "this is pandering."
Mulshine's duly outraged reaction shows that pandering works, at least for some pundits.
If New Jersey voters enjoy the pandering too much, Christie will reward them with more of it, to the detriment of the Garden State's future -- because another immutable economic truth is that incentives work.
Mulshine ends by saying:
I suspect that, coming from California where income taxes really are used to reduce property taxes, even Moon Unit Zappa would have a better understanding of our property-tax problem here in Jersey.
If New Jersey folk are looking to California for good fiscal practices, they really are in some trouble.
Join the conversation