New Jersey Governor Chris Christie made the right decision last night, when he not only signed his fifth balanced budget but also vetoed over $1 billion in new tax increases that had been passed by the New Jersey legislature. Christie’s leadership is commendable, not only because it demonstrates a strong understanding of smart tax policy, but also because it sends a clear message to legislators: New Jersey is in an economic spiral, and Christie will not contribute to the Garden State’s decline.
The correctness of Governor Christie’s tax-increase veto is corroborated by extensive data. By refusing to hike taxes on businesses and on top earners, the governor is putting New Jersey on a safer financial path – one where companies and people stay, instead of moving to a state with a lower tax burden. New Jersey simply cannot afford to keep raising taxes on its job creators. Between 1992 and 2011, New Jersey lost $22.30 billion in net adjusted gross income. In nearly every metric used to measure economic health in An Inquiry into the Nature and Causes of the Wealth of States, New Jersey fared poorly. For example:
- In addition to a top marginal state income tax rate of 8.97 percent, New Jersey has some of the highest state and local taxes in the nation.
- New Jersey’s state net pension liabilities are the sixth-largest in the nation (notably, in his approved budget, Christie also slashed the pension payment).
- New Jersey is not a right-to-work state. Instead, it is a forced-union state. Our data analysis shows that over the past decade, the growth differential in personal income between right-to-work and forced-union states is a whopping 12.8 percent in favor of right-to-work states. (Personal incomes have grown by 58.0 percent in right-to-work states as opposed to 45.2 percent in forced-union states.
- On its 18th annual Small Business Policy Index (2013), the Small Business and Entrepreneurship Council ranked New Jersey the second-worst state (behind California) for small businesses.
- The nonprofit Tax Foundation’s 2014 State Business Tax Climate Index also ranks New Jersey at a dismal 49th (better only than New York), and describes the state as suffering from complex tax structures with high rates.
Clearly, in order to be the effective leader that New Jerseyans elected him to be, Governor Christie must take steps to reverse the state’s current course. In vetoing $1 billion in new tax increases, Christie showed his commitment to improving New Jersey’s future. Other governors would do well to follow his lead and stand up for smart, effective jobs policies.