New Jersey, Counting on the Inelasticity of Demand Curves

By June 30, 2009Economy, Taxation

From Jim Geraghty, The Campaign Spot, “It’s Easy To Cut the Budget When You Have No Other Option“:

New Jersey Governor Jon Corzine is touting the fact that by signing the budget [Monday], he “became the first Governor of New Jersey in over six decades to reduce, two years in a row, the size and cost of state government.”

Except that he really didn’t have too much choice in the matter, as the state is facing a “historic tax-revenue collapse” and the state constitution requires a balanced budget. And the revenues started plummeting in the first months of the budgetary year last year.

And while the current budget does include some spending cuts, it also makes up the gap with $2 billion in federal stimulus money and raises taxes on wine and hard liquor, tobacco, and top earners. Oh, and if you win the lottery, the state is now taxing those winnings, too.

Which reminds us again of the Wall Street Journal editorial on the Albany-Trenton-Sacramento disease, with the second headline, “How three liberal states got into deep trouble with ‘progressive’ ideas.

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