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

Tuesday, November 30, 2010

Richie Rich

The poor little rich kid...

We've been hearing for a while about the plight of NJ's wealthy: those poor, poor souls who have no choice to flee the state because their taxes are so high.

Turns out it's total crap:
In New Jersey, opponents of progressive taxation, including Governor Christie, argue that tax rates are too high. Indeed, just a month before he filed his 2009 tax returns, the governor said he intends to lower income tax rates within two years in order to stimulate the economy and make New Jersey more competitive with neighboring states. 
But a full understanding of the state's tax structure shows that New Jersey is already quite competitive. And Governor Christie's own 2009 New Jersey income tax return shows the truth often isn't as simple as it seems. Even though their household income pushed them into the top bracket of 10.25%, the Christies actually paid just 6.2% of their family income to the state. 
The 6.2% effective income tax the Christies paid to New Jersey is less than they would have paid to New York State if Mrs. Christie's job were there; less than they would have paid if she had worked in Philadelphia; and about what they would have paid if they had lived in Georgia.

It is absolutely essential to understand the difference between marginal rates and effective rates if you want to debate this stuff, but I'm convinced most people really don't get it. That's probably because, even before the advent of e-filing, most people used tax tables to calculate their taxes, which really don't show how you get to the number you get to.

Of course, our media, which has shown time and time again that it is innumerate, doesn't help. I used to think that it was a deliberate ploy of the corporate media to exploit this ignorance, so wealthy families could push the "Death tax takes half of your money!"meme.

But now I think it's that many of the reporters who cover this stuff just don't understand it. Scary.

By the way, NJPP - more like this, please!

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