Corzine Considers Stealth Tax

Governor Jon Corzine is considering a stealth sales tax to help close New Jersey’s $4-$6 billion budget gap. The stealth tax is called a gross receipts tax.

During a radio talk show appearance Wednesday night, the new governor said he is exploring the possibility of a gross receipts tax, similar to those that a handful of states like New Mexico use instead of a sales tax.

Corzine did not say whether he would consider using it to replace, or to supplement, New Jersey's current 6 percent sales tax.

This is a very clever way to tax items currently exempt from New Jersey’s sales tax – food, clothing, medicine and services – and to hide the tax from the public. A consumer’s receipt won’t have a line showing the amount of tax paid, but it will be reflected in the increased price of the good or service purchased. The Governor can then proclaim the general public isn’t being taxed, businesses are being taxed. Very sneaky.

Unlike the sales tax, which is collected from individuals through millions of transactions, a gross receipts tax is assessed as a percentage of the total sales of affected businesses, which then decide whether to add the cost to the prices they charge customers.

A business wouldn’t be in business very long if they decided not to add the tax on to the price of their merchandise or services. The average net profit margin for retailers is very slim, about 3 to 5% in good years and for grocery stores it’s a razor thin 1%. A gross receipts tax is a cost of doing business, no different than employee compensation, utilities and all the other expenses a business pays to bring a product or service to consumers.

However Governor Corzine may try to hide a tax increase, you’ll be paying it.

Corzine has floated about a zillion new tax ideas. How many of his cost cutting ideas have you heard? You have not heard any Corzine ideas for reducing state spending because Corzine has been too busy thinking up new ways to increase state spending and taxes.

Is this really what the people of New Jersey want? Why not write or call Governor Corzine and tell him your thoughts? Governor Jon Corzine contact information:

Telephone: 609-292-6000
Mail: Office of the Governor, PO Box 001 Trenton, NJ 08625
Email: Governor’s email form