Letter to the Editor: Temporary Tax Hikes

Published February 12, 2010

The fact New Jersey’s legislature is talking about extending the “temporary” income tax hike on high-income earners is not surprising considering the track record of similar “temporary” tax increases in other states (“N.J. lawmakers reconsider extending tax increase for high-income residents,” Feb. 5).

Tax hikes that rely on small tax bases, such as high-income earners, take attention away from efforts to address why the budget was fundamentally off-kilter in the first place. Such tax hikes create larger boom-and-bust periods for budgets and drive away capital and jobs to lower-tax states.

Capital is essential for a state trying to rejuvenate its private sector. Policy that drives capital out of the state, or takes capital away from those who remain, will ultimately hinder the recovery.

In conjunction with simply reducing spending, the state also needs to look into more innovative governing solutions, such as privatizing state services and infrastructure, enacting more stringent tax and expenditure limits, and reevaluating the true functions of government.

John Nothdurft, the Heartland Institute

This letter was originally published in The Star-Ledger.