Prioritize Human Needs not Corporate Greed
NJ Democrats Are Offering King-Size Tax Cuts to Corporations As Nearly 4 in 10 Continue to Struggle
If budgets are about priorities, it seems pretty clear that New Jersey’s are skewed. The state is considering two separate corporate tax cuts at a time when the state needs more money for its poorest and most vulnerable residents.
The two tax cuts — expiration of a tax surcharge on New Jersey-based corporate profits and massive slashing of state taxes on foreign corporate income — are likely to cost the state between $1.3 billion and about $2 billion over the next two years, according to critics, at a time when the state is facing a shortfall in revenue and difficulties assisting in the large number of those in need.
New Jersey, as we all know is an expensive state in which to live. Most of us, however, can afford to live here. As NJ Spotlight has reported, “the median household income (in the state) rose by more than 17% over the five-year period from 2016 to 2021, reaching $89,296.” That means that more than half of all families in the state earn upwards of $90,000.
And while the poverty level remains comparatively low — with 10.2% of people were living under the federal poverty limit — another 27% were struggling to make ends meet. According to the United Way of North Jersey’s ALICE report, a total of 37% of New Jersey Households earn less than what it takes “to afford housing, child care, food, transportation, health care, and a smartphone plan, plus taxes.”
ALICE stands for Asset-Limited, Income-Restrained Employed and is meant to describe the large number of people across the country who struggle but fail to qualify for most federal or state assistance. It is a far more accurate measure of need than the federal poverty line, which takes into account only a small portion of what is needed to survive and does not account for variations based on geography.
This number has fluctuated in recent years, but not by a lot. I’ve been writing about the sustainability and survival budgets for a number of years — in columns throughout the early 2000s and into the 2010s and as part of a team of reporters working on the 37 Voices project, in which we interviewed 37 men and women who were struggling to survive in the state for various reasons (my story here). These included age and health, immigration status, substance abuse, mental health, childcare costs, and so on. The people we talked with lived mostly in Essex and Middlesex counties, but the ALICE cohort is prevalent throughout the state, with the Cumberland, Passaic, Essex, Atlantic, and Union topping the list. (Covid did not shift the percentages dramatically, but it did drive up the cost of surviving and living for all.)
The ALICE cohort — the more than one in four New Jerseyans who live above the poverty threshold but earn less than the ALICE survival budget — exist in a black hole of assistance. According to the latest ALICE report:
Due to income and assets limits, most ALICE households are not able to participate in public assistance; and additional barriers, strict program requirements, and stigma prevent even households in poverty from participating. In addition, income and asset limits for public assistance can create “benefits cliffs” that limit economic mobility.
Basically, one in four residents of one of the richest states in the nation are forced to struggle because our safety net is based on a decades-old model of aid — a problem that can be rectified if we only made it a priority.
This brings me to the state budget — and the federal negotiations over the “debt ceiling” — both of which seem intent on leaving out large swathes of struggling Americans. At the federal level, Republicans are pushing hard to impose work requirements and stricter income limits on aid to those in need, even as they leave in place massive subsidies for corporations that ship out jobs and for massively profitable energy companies. Democrats, for their part, have lost sight of what is most important and have allowed the GOP to misuse the debt ceiling to impose these changes.
As I wrote on Twitter, the debt ceiling rule is bad law.
In New Jersey, the Democratically controlled Legislature seems more interested in helping out the corporate sector — which has been earning record profits. Businesses, of course, see it differently. They say (without evidence) that the state’s tax rules are driving businesses from the state, that the state must do this to remain competitive with other states, and besides these taxes are an imposition.
This is nonsense that even the generally business-friendly and anti-tax Star-Ledger editorial board saw through in an editorial on the surcharge expiration.
The Ledger rightly dismissed the corporate-flight narrative, and made the case that the state’s residents, particularly its lower-income residents, would benefit from enhanced services that this corporate tax surcharge would continue to generate. The mayors of the state’s two largest cities — Ras Baraka of Newark and Steven Fulop of Jersey City — “are both calling to extend the surcharge” to demonstrate their progressive bonafides in advance of the 2025 gubernatorial election, the paper says. Politics aside, the paper (which has a history of trying to walk a fine line between liberal social programs and keeping taxes as low as possible) argues that the mayors are “right on the merits.”
Do we need the revenue? The short answer is yes. Murphy has begun to repair the pension system, but it’s still one of the most poorly funded in the country. Wall Street has lifted the state’s credit rating several times on his watch, but that rating is still the second lowest in the country. And now, the Department of Treasury warns that revenues are falling $2 billion behind expectations.
The state, the Ledger says, has ‘“glaring unmet needs.” Murphy has spent his six years in office “righting the state’s finances,” New Jersey “still needs to invest in expanding preschools, hiring teachers, and rebuilding NJ Transit so that it can stop devouring its capital budget to cover operating costs. Not to mention the crisis in affordable housing.”
What the Ledger has avoided saying is that budgeting is a matter of priorities. Of choices. And these choices reflect who and what the decision makers — in this case, Gov. Phil Murphy and the Legislature — believe are important. There is support for corporate tax cuts, but not much talk about helping those in need, a political reality that has fueled the kind of disingenuous arguments about immigration, homelessness, and development that makes blue New Jersey sometimes feel no different than more conservative states — as evidenced by this meme I saw posted on Facebook by a New Jersey friend.
This meme posits a conflict between helping two groups who need help, as if this country doesn’t have the money to help both, and ignores the obscene amounts we spend on the military and subsidies to Big Oil, the weapons sector, and finance. The real conflict is not between helping homeless Americans or helping refugees. It is between giving money to Exxon-Mobile, Raytheon, and Goldman Sachs and not providing housing to those who need it or making sure kids get the nutrition they need.
Our political classes have apparently decided that it is OK for millions to live in poverty or to struggle just to meet basic needs, so long as their favored corporate funders get to pad their bottom line with government cash.