On New Jersey Taxes and Pensions

by Andrew Gillen

Over at Quick and the Ed, Kevin Carey bashes on past and current New Jersey Governors. I’m all for bashing politicians, but the story Kevin tells is a bit… skewed.

Kevin’s version is that [evil] past Republicans cut taxes, and as a result did not fund teacher pensions. Fast forward to today, and [evil] current Republicans point to the underfunded pension and say we can’t afford to pay teachers their pensions.

There is just one little problem with this story. In 1997, when the tax cuts happened, the tax burden in New Jersey was 11% (total state and local taxes paid as a percent of total income). This was the fifth highest tax burden in the country. In 2009, their tax burden was 12.2%, the highest in the country.

It doesn’t make a whole lot of sense to blame tax cuts for the state of teachers’ pension funds when taxes went up. Moreover, if the state with the highest tax burden is unable/unwilling to fund pensions, then it doesn't seem like even higher taxes are going to remedy the situation.