Everybody Wants to be a Millionaire (No Tax, Please)
Everybody wants to be a millionaire.
Because when they try to raise your taxes, you just cry out “No fair!”
In both Minnesota and New Jersey, efforts to pass a millionaire’s tax failed, with different results.
Republicans turned down a last minute deal that would eliminate the proposed new top tier tax rate on the richest Minnesotans – originally the top 2 percent of all earners, which was instead reduced to only those who make more than $1 million per year, a total of 7700 Minnesotans.
The reason Republicans have made it a priority to protect those 7,700 Minnesotans (0.03 percent of the state’s population) from a tax increase is because, as Rep. Mary Kiffmeyer (the former Secretary of State under Republican Governor Tim Pawlenty) says, why impose such an extra burden on “those who’ve actually worked hard”?
Ah yes. If you (single parent, recently-laid-off office worker, individual with disabilities) are not reeling in the big big bucks, clearly you are not working “hard.”
A similar “antitax extremism,” as a New York TImes editorial says, is behind New Jersey Governor Chris Christie’s vetoing of the millionaire’s tax, in keeping with his no-new-taxes pledge. The extra pain a Jersey millionaire would feel from the millionaires’ tax is far less than others — including the low-income families, single working mothers, urban poor — are feeling after Christie’s massive budget cuts. As Mary E. Forsberg, research director for New Jersey Policy Perspective, wrote yesterday in the Star-Ledger:
How much do [Jersey's millionaires] pay in state income tax on $2.8 million? About $231,368, or 8.4 percent of their income.
How much would it be under the “millionaires’ tax” that was proposed by Democrats? About $262,863, or 9.5 percent of their income.
The difference of about $30,000 is what plenty of Jerseyans affected by the budget cuts make per year. But that amount is just about what the “average millionaire filer” makes in one week. As Forsberg points out,
Cuts had to be made. The state saved $45 million by reducing the state Earned Income Tax Credit. That meant the poorest workers in the state got what amounted to a $300 reduction in their benefit for the year. That’s about one week’s wages for a single mother with two children working at minimum wage. See how that works?
That $300.00 has to go quite a long way. NJ Transit (again) raised its ticket prices so the round-trip ticket that cost $12.75 last year is now $17.00. Also, if you now earn more than $5000 in New Jersey, you very well no longer qualify for FamilyCare, a state insurance program for those with low incomes: New Jersey is planning to cap eligibility at $5000.
Millionaires have their expenses too, of course, and one can imagine that having to pass on $30,000 more to the state could be annoying, given the costs of the shore house, country club membership, tuition at private or religious schools, the mortgage, saving for the private out-of-state colleges your kids will clamor to attend (only losers stay in Jersey for college unless they get into the one in Princeton), etc., etc.. Etc.
As Forsberg points out, Jersey’s millionaires benefit a lot from being here, in close proximity to New York and Wall Street. The state’s taxes don’t exactly seem to be keeping them away:
Among all states, New Jersey has ranked at the top in terms of median income and number of millionaire households for years. That’s why one needs to be skeptical of the claim that a mass exodus of wealth is taking place. These wealthy people probably also understand that marginal tax rates are different than effective tax rates, but that would go against their self-interest. (You may remember that Gov. Christie’s income in 2009 put his family in the 10.25 percent marginal tax bracket, but their effective tax rate was actually 6.2 percent — big difference.) Clearly, these are the people who are doing the best in New Jersey.
No argument that they’re doing “the best in New Jersey.” But like the governor who’s clearly looking out for them (after all, he is one of them), they’re not all doing what you might call “the best for New Jersey.”
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Photo by magerleagues