"Knowledge will forever govern ignorance

 and a people who mean to be their own governors

 must arm themselves with the power which knowledge gives."

Friday, February 10, 2006

The Birth Of A Tax

State Senator Robert Smith (D-Piscataway) said: "It's a very tiny tax."

That’s the way all taxes are born, tiny. For example, when the federal income tax began in 1913, the tax rate was 1% for the majority of taxpayers and the maximum rate was 7% for people with incomes over $500,000. When the Social Security tax was enacted in 1935, the rate was 1% on the employer and 1% on the employee, on a maximum $3,000 of income.

The same is true of state taxes. New Jersey’s sales tax began at 3%, it’s now 6%, our state income began with a top rate of 2.5 %, and it’s now 9%. And on it goes with every tax government has ever imposed. They start tiny and grow into full fledged monsters, each with their own costly bureaucracies that must be supported with ever more tax dollars.

Smith has introduced legislation in the state’s senate that would create "a new tax on anyone using public water, a proposal Governor Jon Corzine said is worth considering".

Sen. Anthony Bucco, R-Boonton, said the proposal doesn't prevent the state from taking money collected from the water tax and using it for other purposes, as the state has done for 12 years with the now nearly insolvent Unemployment Insurance Trust Fund.
Not to mention the other bankrupt state run trust funds for – transportation, property tax relief and school construction – that quickly come to mind.

We don’t need another new tax, along with the attendant bureaucracy that will be required to monitor and collect the new water tax. We are all for preserving clean water, but the state should use funds from one of the other gazillion fees and taxes it already collects to pay for any necessary programs.

The last thing New Jersey needs is another tax, no matter how "tiny".



6 Comments:

At 12:33 AM, Blogger Ken Adams said...

"And finally, monsieur, a wafer-thin mint."

 
At 3:13 AM, Anonymous Jim - PRS said...

I'd like to give Senator Smith a hop in the ass -- but just a tiny one.

 
At 1:57 PM, Blogger Sluggo said...

I guess the next morning you're just a very tiny bit pregnant.

 
At 11:22 PM, Blogger Jon Wear said...

I understand not wanting another tax, but comparing it to how the Federal Income Tax started and the SS Tax is a little off. That taxes were capped at much smaller rates then because the total government budget was a LOT smaller than it is today. Also, everything cost less then. Compare those sums to real dollars and you'll have a better idea of how much the tax really was. Saying bread used to cost only a nickel leaves out the fact that working wages were a lot less too. These kind of stats make people think of 1920 prices with 2006 wages. It was never that way.

 
At 12:37 AM, Blogger Enlighten said...

Jon,

What does the fact that everything “cost less then” have to do with the increase in the percent of the various taxes mentioned? As income or the price of goods rose, so too would the amount of tax revenue generated without increasing the percent of the tax.

$3,000 in 1935 is the equivalent of about $41,325 today. If the percent of SS tax paid by an employee had remained a constant 1% - the SS tax paid by the worker in 1935 was $30 and on an equivalent income today it would be $413.25. But the percent of SS tax increased to 6.2% and now the worker pays a SS tax of $2,562. However you slice it the woker pays 5.2% more of his income, as does the employer. than when the tax began.

A $500,000 income in 1913 would be equivalent to about $9.5 million today, but the top income tax rate when the tax was enacted was 7%. Today, even after the “Bush tax cuts”, the top rate is 35% and it kicks in at $336,550. That’s equivalent to about $17,730 in 1913, a far cry from the top rate kick-in of $500,000 back then.

Do you get the idea? The government is taking an ever larger percent of our income. Taxes always start as a “tiny” percent, but have a way of growing.

 
At 9:04 AM, Anonymous Bob said...

Ken,

I just saw that movie. Classic! And apropos here.

 

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