When NJ announced its tax amnesty program, it had high hopes. With sinking revenues and a gaping hole in the budget, Governor Corzine hoped that the amnesty program would give the state some much-needed relief. His lofty goal? $200 million in just six weeks.
Barely two weeks into the amnesty program, the state met its goal. At the end of the program, the state had brought in an amazing $617 million.
Take a moment and let that sink in. That was three times the goal that many didn’t even expect to meet.
Taxpayers were offered the chance to set things right and they did. No chasing. No collections efforts. No heavy-handed pursuit. Just the chance to pay back taxes, no questions asked, no penalties, and reduced interest. And people responded.
I am a big fan of amnesty programs. Many times, taxpayers who get behind are just overwhelmed at the enormity of fixing it. Why make it hard? Why not say just pay us what you owe plus a little interest and let’s move on? NJ did and look what happened.
I’m not saying give cheats a free pass – and neither was NJ. Taxpayers who were under criminal investigation or facing charges for tax evasion were not able to participate.
So what will NJ do with its extra revenue? Offer property tax relief for folks who were paying their taxes: the legislature is now working to put taxpayer rebates that had been previously been cut back into the budget.
Good for NJ (and no, you won’t hear me say that often).
Kelly-
You certainly do not hear “Good for NJ” often these days – if at all.
I do believe that this was the fourth time that NJ successfully offered a Tax Amnesty. Many states have raised substantial amounts of money this way.
I knew that in an election year Corzine was not going to take away the Homestead Rebates from “normal” homeowners. I knew it would only be a matter of time before he would miraculously “find” the money for the rebates and brag to voters about how it was his expertise that saved their checks!
Back to Tax Amnesty – when is the federal government going to realize that a Federal Tax Amnesty Program is an excellent way to raise money – so they can throw more of it away!
TWTP
RDF,
I completely agree! I said way back when I blogged about Singapore’s tax amnesty program that the feds should consider such a program. Shulman says there is at least $300 BILLION in uncollected revenue. I’m guessing that number would shrink if we saw limited amnesty.
I think this was just a ploy to buy votes in the next election.
I don’t know where you got the $617 million number (not that I doubt it) but I’ve heard $400 million. I think $617 million might be the number needed to reinstate the bribe…I mean property tax rebates.
I think we need to wait and find out what the real numbers are. I personally have lost all faith in anything that the NJ government says, does and plans. They had folks on the radio this morning who got letters from the amnesty program that didn’t owe anything or that stated that dead relatives owed back taxes (NJ does tax your death you know).
That number came from the Statehouse Bureau spokesperson Deborah Howlett who said that “at least” $600 million had been officially accounted for as of Wednesday. The last day for collections was supposed to be Monday (June 15) and the final count was expected to top $617 million by the end of the week.
The problem with amnesty is that people take it into account when deciding whether or not to pay their taxes the next year. If I know that I can wait a few years and pay way less than the official penalty, that’s going to be a factor in whether or not I pay.
In fact, as more people make that calculation, the amount of unpaid taxes grows, making amnesty appear more and more attractive. It’s a vicious cycle, and it trains people to bank on unpredictable policies.
Kelly, you’re right.
In today’s paper it does state $600 million which, to me, seems a bit peculiar. The figure is $600 million today, yesterday afternoon it was $400 million and a month ago the figure was anywhere between $80 – $100 million.
So the number has grown by $200 million overnight?
To quote Alice “this is getting curiouser and curiouser”.