New Jersey Inauguration: Governor Murphy Claims the Moral High Ground in Bid to Expand Government
On January 16th, New Jersey Governor Phil Murphy delivered his first inaugural address. Few would take issue with the governor’s vision of justice, fairness, and growth. However, his economic proposals would, inadvertently, erect barriers to these goals. Unfortunately, by couching his proposals in a moral dichotomy, the governor failed to recognize that those on the other side of the issues may share the same ultimate policy outcome goals—justice, fairness, and growth—albeit with far different policy preferences. This threatens to block pragmatic bipartisan progress on numerous pressing issues.
The governor desires a “stronger and fairer New Jersey is rooted in an economy that creates better jobs and provides higher wages … that creates places where industries can grow and communities can rise, where innovative companies are born and where millennials want to live and where seniors want to retire … and, which remembers that we all have value and we all can contribute, including, and especially, the differently abled.” Truly, this is a noble goal that any governor should aspire to for their residents. With one of the most inhospitable economic environments thanks to misguided public policies, the governor has his pick of which to improve in order to actualize his vision. New Jersey ranks third worst in economic outlook and 4th worst in performance according to the Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index. This index uses 15 variables associated with economic growth to determine outlook, such as top marginal income tax rates, public employment as a percentage of total population and tax expenditure limits. The estate tax, 5th highest corporate income tax, 2nd highest property taxes, and 9th highest personal income tax contribute to this dismal economic climate.
Reforming the state tax code would dramatically improve the state’s economic outlook. Unfortunately, the governor only barely acknowledged the problem, stating a “stronger and fairer New Jersey…delivers on the promise of property tax relief.” Sadly, the speech made no mention of one of the pension crises fueling the upwardly spiraling tax burden. According to Unaccountable and Unaffordable 2017, New Jersey’s 26 percent funded ration is the 5th worst in the nation. Per capita unfunded liabilities grew 5.6 percent relative to our 2016 publication and now exceed $27,800—7th worst in the nation. Overpromising on pension benefits, underachieving on investment management, and overestimating future returns have saddled residents with this 2nd highest property tax burden in the nation in addition to egregiously high taxes overall.
Political parties largely agree on some areas of tax reform. Gov. Murphy decried “massive tax breaks to a handful of select and connected big corporations,” like the $7 billion dollar Amazon proposal. The American Legislative Exchange Council, Americans for Prosperity, and New Jersey Policy Perspective, unlikely allies, spoke out against the proposal in October. Gov. Murphy could improve the state’s economic environment through revenue neutral corporate tax reform by eliminating deductions, credits, and exemptions to pay for lowering the tax rate. This would create a fairer, faster growing economy.
If the governor continues to paint policy disagreements as a “battle between right and wrong,” he may find common ground illusive. Even when directed at “The Swamp,” moralistic rhetoric inflames partisanship by assuming a difference of opinion comes from malice rather than a different perspective or set of information. New Jersey’s dire economic and fiscal condition demands significant reform across a spectrum of issues. The righteous indignation on display is no way to foster the dialog needed to build consensus around pragmatic ideas.