Last week New Jersey residents got word that current fiscal year tax collections are down and the state budget shortfall may reach $1.2 billion. The future doesn't look much brighter, as the shortfall for fiscal year 2010 is expected to more than quadruple to an astonishing $5 billion.
Late last month, we discussed Governor Jon Corzine's rather unimpressive stimulus package. It includes proposals like the introduction of the "single sales factor" and eliminating the state's "throw out rule." Together, these proposals could allow many large New Jersey companies that do business across several states to avoid tax liability.
To be fair, other components of Corzine's stimulus package, like giving more money to food banks and increasing aid to residents in need of heating assistance, would help those hardest hit by these tough economic times. But the Governor did little to distinguish between helping people and boosting corporate profits when he said, during a recent briefing, "Everything that we talked about in the stimulus program I think is more important today than it was before."
For some more commonsense, responsible policy alternatives, read Mary Forsberg's report from New Jersey Policy Perspective, What's the Rush? Costly Tax Changes Need More Deliberation. We second Mary's suggestions about the need to carefully consider a variety of reform options including combined reporting, corporate disclosure, and publishing a tax expenditure report. We urge the Governor and others to follow Mary's advice before quickly and perhaps carelessly pushing through the aspects of the Governor's stimulus that amount to poorly targeted tax cuts.