I will protect your pensions. Nothing about your pension is going to change when I am governor. - Chris Christie, "An Open Letter to the Teachers of NJ" October, 2009

Saturday, August 28, 2010

Q: How Dumb Is the Tax Foundation? A: Very.

Via njspotlight:
According to the Tax Foundation, New Jersey’s 7 percent retail sales tax ranks the state 19th in the country in terms of what’s known as a "transparent" tax – meaning citizens are aware of how much they pay and when. There are no local sales taxes in the Garden State, although there are some localities in Urban Enterprise Zones that are exempt from charging full tax rates on certain purchases. What’s more, New Jersey exempts many types of purchases from sales tax, such as clothing and food.
You can see all the different rates for the states at the TF website. What you won't see is any accounting for sales tax exemptions!

I guess it never occurred to the TF that there might be a wee bit of difference between a state like Alabama that taxes food sales and a state like NJ that does not. Especially on the working poor.

Remember: the Tax Foundation is the source for Christie's claim that we are the most taxed state in America.

Tax Foundation Economists Forum


Anonymous said...

What's funny is that when you blogged against the Tax Foundation by using an editorial written by Tom Moran of the Star-Ledger (http://jerseyjazzman.blogspot.com/2010/04/good-takedown-of-tax-foundation.html), that editorial was totally wrong as it used B.S. numbers from the NJ Policy Perspective:


I await your calling NJ Policy Perspective "dumb."

Joseph Henchman said...

Hello, information about sales tax exemptions is in our annual "State Business Tax Climate Index," which is on our website. Our ranking of states in the Index accounts for sales tax exemptions.

The report you cite is about sales tax rates, so that's why it only has sales tax rates.

Cute picture.

Joe Henchman, Tax Foundation

Duke said...

In other words, Joseph, you admit exemptions are an important part of calculating taxes - you folks wrote a report about it, after all - but you didn't include it here.

Because while it may very well affect your rankings, you weren't ranking that because... well, you just weren't.


Anonymous said...

Tax Policy Center has a table here showing the top federal marginal tax rate over time, but what is subject to that that top rate has changed dramatically over the years due to changes in thresholds, exemptions and deductions.


Thereby, according to your criteria, such a comparison across times (like comparisons across states) is invalid. And Tax Policy Center is very dumb.

Duke said...

I'm not prepared to comment on TF's calculations until I see the methodology. But I know their track record:


That rank of 7th - does it include taxes paid to NYC and PA? Because that was a big part of Moran's argument.

On this blog, I have consistently pointed to CBPP's ranking of NJ's taxes:


As a layman, I have found CBPP to be a reliable source; people I trust consider them reliable as well.

If the TF has evidence to the contrary, let's hear it.

Duke said...

Anonymous (btw, you're my favorite composer):

This is the game: TF puts out some "facts" that "prove" a point, while omitting any context for understanding those facts that would allow someone - especially an admitted layman like myself - to come to a rational conclusion.

Bob Somerby at the Daily Howler has written about this for years. This method has led to large numbers of people who are convinced that the poor don't pay taxes, or cutting taxes raises revenue, or health care in this country is cheaper and better than any other country's.

It's pernicious and has led to one horrible policy decision after another.

Anonymous said...

Note that the CBPP rankings you cite that rank states according to total state and local own source revenues include tuition paid to Rutgers University. Should that really be a statistic that is worthy of discussion when assessing how New Jersey stacks up in terms of "TAXES"?

But again...it's the Tax Foundation that is dumb and unreliable. CBPP would never skew anything.

Duke said...

Yes, I'm sure the comparatively wildly high tuition at Rutgers accounts for most of the discrepancy. After all, we're the only state in the country that charges tuition at a public university...

If you want to defend the TF, great - post a link to something substantial defending it.

Anonymous said...

This just shows how dumb you are.

It's the fact that NJ has less tuition revenue than other states that puts them lower in the CBPP ranking.

Tuition is not a tax, which is why adding that (along with other non-tax revenues) in for all states to make NJ look lower in "taxes" is misleading, which is what CBPP did.

Duke said...

I will admit it was dumb of me to take a swipe at Christie's jacking up tuition rates in the context of this argument, because I'm conflating two issues and muddying the waters. Fair enough.

But you still evaded answering my point: other states have public universities that charge tuition. Where's the evidence that Rutgers's revenue is so out of line as to skew the TF rankings as much as they have been skewed?

I'll wager that TF's inclusion of out-of-state-taxes in NJ's ranking - which was Moran's main point - is far more influential on our ranking than any differences in tuition rates at universities.

Further, I would contend that discrepancies between in-state and out-of-state tuition rates do constitute a type of "tax" on a state's own citizens. It's admittedly complicated, which is why TF should stop trying to falsely make it appear so simple.

In any case - no one in this thread from TF has really addressed the point of this post: it's dumb to rank states by their sales tax without taking into account what tax exemptions there are in different states.