NJ is not exactly known for affordable living – especially when it comes to taxes. It appears that will only get worse in 2009 as lawmakers scramble to close holes in the budget. The state budget currently sits at $28.6 billion, about $4 billion less than last year.

Faced with flat revenues, the legislature has made some reductions in spending. Despite resistance from state unions, cuts will be made for public employees as part of a deal struck earlier this year. Although by cuts, I really mean “delayed pay raise.” Additionally, state aid to local governments will be reduced.

But here’s where the bleeding begins. Since the budget must balance, the drop in revenue has to be made up somehow. And while cuts have been made, it isn’t enough to fill the gap. What does this mean? Taxes are going up.

There’s no doubt that the income tax increases will make an impact. They are not across the board: the current proposal would raise taxes on incomes above $400,000. Worse, it would eliminate the property tax deduction for those making more than $150,000 and eliminate property tax rebate checks for residents other than senior citizens and the disabled. Considering that NJ has one of the highest property tax rates in the nation, that is a significant bite.

NJ will also lose its appeal as a cheap place to buy wine and hard liquor for Pennsylvanians and other neighboring states: excise taxes on wine and hard liquor will go up.

And just when residents of NJ thought they couldn’t possibly pay anymore to buy cigarettes, they find out they’re wrong. Levies on cigarettes will also rise.

Interestingly, this budget looks a lot like the pre-Corzine budget in 2004. I wonder how much it will affect the gubernatorial race this year.

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Kelly Erb is a tax attorney, tax writer and podcaster.


  1. On one hand, I think Corzine’s stuck between a rock and a hard place. He’s trying to clean up the mess others have left behind, and he’s hitting a wall with the recession.

    On the other hand, it’s becoming more difficult for me to justify staying in NJ. We pay the highest property taxes, and my health insurance, which I buy myself, would be cheaper if I crossed over the river. Same for car insurance. Plus, NJ started taxing “services,” so not only are you taxed on things like gym memberships, but freelance writers are considered a “service” — meaning I pay more out of pocket to taxes because I live in NJ.

    The NJ property taxes affected what kind of house I bought (row home, no yard), and losing that rebate is a big blow.

    But do I want to pay Philadelphia wage and business privilege taxes? Not really, and I prefer NJ burbs over Pa.

  2. KPE-

    As soon as my father goes to his final audit I am “outta here”! NJ that is. I will be running as fast as I can to Wayne County in Pennsylvania.

    NJ has a lot to offer – but unfortunately it also has greedy politicians. Most NJ politicians hold two and three show and no-show paying jobs, as well as giving show and no-show paying jobs to spouses and other relatives – and therefore get to double and triple dip into the state pension plan and the state health insurance plan and other benefits.

    It is difficult to effect change in NJ because the Democratic controlled legislature gives teacher and other public employee unions everything they want without question in exchange for large political contributions and guaranteed votes. Corzine et al have added 65,000 new public jobs in NJ in recent years – thereby assuring at least 130,000 more Democratic votes.

    Corzine is a big disappointment. He was an “outsider”, a millionaire who did not need graft and pork money, and was supposedly a business brain (he actually was just a stock broker – a salesman – who was in the right place at the right time at GS and certainly no business brain). However he has made NJ much more worse off with graft and pork than before he took office.

    The only way NJ will change is if the voters embrace the G.R.I.P. philosophy – Get Rid of Incumbent Politicians – and vote the bastards out en masse!

    Thanks for letting me rant.


  3. Glad to hear Rhode Island isn’t the only state with ridiculous pension obligations, insane taxes, and impossible corrupt entrenched politicians! >8[

    Urb (who never thought he’d see the day Massachusetts looked efficient by comparison)

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