City Journal: Murphy’s Law

“New Jersey faced a government shutdown late last week when its governor, Democrat Phil Murphy, squabbled with leaders of his own party in the state legislature over whose taxes to raise—those of businesses or those of wealthy individuals. In the end, officials compromised and raised taxes on both. The tax burden will increase by about $440 million in a state where residents and businesses already pay some of the nation’s steepest levies. Even before the new, more expensive budget passed, businesses said that they were reluctant to expand in New Jersey, and surveys show that Jersey’s residents leave the state in greater numbers than citizens of most other places. Among those exiting in droves are the state’s young people, and it’s difficult to see how placing more burdens on the state’s economy will help stem that outflow.”

“Murphy’s philosophy is to increase taxes and spending to encourage “investment.” He’s gotten a break because of the superheated “Trump economy,” which is registering strong gains that have boosted state tax collections. Still, Murphy wanted more; thus, the tax increases. Among his priorities was increasing spending on schools by nearly $350 million (counting $58 million in preschool funding) in a state that already spends more per pupil on public schools than most others. True, Jersey’s K-12 schools are better than most, but the state’s long-term outlook is troubled. A recent study by the New Jersey Business and Industry Association, for instance, found that the state had the highest net outmigration of so-called millennials and post-millennial youth. Well-educated Jersey young people leave the state—and they don’t come back.

No doubt, in Governor Murphy’s way of seeing things, fixing that problem will require even more investment—and higher taxes along with it.”

Read the full article here.