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‘If you tax them, they will leave’

Chris Christie seeks to mend the broke and broken state of New Jersey.

Apr 26, 2010, Vol. 15, No. 30 • By FRED BARNES
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Trenton

If the citizens of New Jersey like candor, Chris Christie is the governor they’ve been waiting for. Or I should say citizens of “the failed state” of New Jersey, as he tends to call it. It’s a “broken state” and a state that’s “broke.” New Jersey was in “a shambles,” he says, when he became governor in January. It’s “a fiscal basket case,” suffering from the “madness” of tax increases and excessive government spending, a “wonderful state” that’s been brought to “the edge of bankruptcy” and faces “the ruination” of its economy and “the quality of life that we want all of our citizens to have.” New Jersey has “deceitful politics,” and “the defenders of the status quo .  .  . yell and scream” and “demonize” those, like Christie, who seek change. 

The state’s misery is quantifiable, and Christie routinely quantifies it in his speeches. His budget address in March to a joint session of the state legislature—controlled by Democrats—included this riff:

New Jersey residents are the most over-taxed in the country. We have one of the highest top marginal in-come tax rates, the second highest sales tax rate, the sixth highest corporate tax rate, and the highest property taxes in the nation. Add it all up, and the sad fact is that we are number one with more state and local taxes taken as a percentage of income than any other state in America. This is one distinction I am prepared to give up.

There’s more. “We are first in the number of college students who, once educated, leave our state,” Christie said. “We are near the top in debt, and number one in getting the least back from Washington for every dollar we pay in taxes.”

And people, at least the more affluent, are fleeing. From 2004 to 2008, New Jersey “experienced a net outflow of wealth of $70 billion,” the governor said. “If you tax them, they will leave.” Unemployment is the highest (9.8 percent) in the region, having doubled since 2007. The state lost 121,000 private sector jobs last year while local governments added 11,300 new employees. There are “two classes of citizens in New Jersey,” Christie said, “those who enjoy rich public benefits and those who pay for them.”

Governors aren’t ordinarily this downbeat about their own state, even when pointing out the mistakes of their predecessors. I can’t think of another example. Christie is notoriously blunt. When reporters tried to question him during a Q&A session last week with businesswomen, he brushed them off, saying questions were limited to “real people.” To a woman who asked if he has a “strategic plan” for the state, he simply said, “No.”

Before running for governor, Christie, 47, was U.S. Attorney for New Jersey with a reputation for single-minded pursuit of corruption by public officials. Though he lacked prosecutorial or trial experience, Christie had sought the job aggressively after raising money for George W. Bush’s presidential campaign in 2000. Bush appointed him. His records in seven years was impressive: 125 convictions or guilty pleas from public officials, both Republicans and Democrats. 

Christie has a powerful motive for not sugarcoating the state’s troubles. His program is radical, at least for New Jersey. He wants to slash $10.7 billion from a 2011 budget projected at $38 billion, reduce taxes, cut regulations, and privatize enterprises such as the state-owned TV network and parking garages. He refuses to consider raising a single tax rate.

This includes the “millionaire’s tax.” Perhaps only in New Jersey would such a tax apply to personal income starting at $400,000. Passed in 2009, it raised the top rate from 8.9 percent to 10.75 percent before expiring at the end of the year. Democrats declined to renew it in a lame duck session of the legislature in December, leaving the issue to Christie.

“They wanted a twofer,” Christie told me. “They wanted the issue and the revenue” (estimated at $900 million in 2011). “My response was, you’ve got the issue. Now you’re not getting the revenue.” Christie says more than half the 63,000 taxpayers earning over $400,000 are small business owners. “This is not a tax on the rich. We can’t grow jobs if we continue to raise taxes.”

The tax issue has spilled into a feud between Christie and the state teachers’ union. The governor has asked teachers to forgo a pay raise for one year and begin paying 1.5 percent of their salary for their generous medical benefits. The union answered with TV ads urging Christie to approve the millionaire’s tax instead. “All of this stuff is about the union’s greed rather than putting the kids first,” he said on Fox News.

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