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The numbers are in and the trend continues: the rich are indeed getting richer. The latest confirmation comes from the state's own Status of Income report on tax returns.
Analyzing the returns for 1997, the most recent year available, the New Jersey Treasury Department found that just about half the income in the state goes to those making more than $100,000 a year, and only about 25 percent goes to those making less than $50,000-even though there are far more of these people. This, the report says, is the exact opposite of the situation in 1987, when people earning $50,000 or less accounted for just about half the income and those above $100,000 made up a quarter of it. These figures reflect the same pattern that New Jersey Policy Perspective reported last March in a study by economist Judith Fields of Lehman College. She too found income to be unequally distributed, and growing even more so.
What's especially interesting about this latest report is the reaction to it. These days, almost no one disputes the big income gap. Instead they seem to want us to think we should personally thank each one of New Jersey's 1,530 brand-new millionaires for doing the rest of us such a favor.
One state legislator, Assemblyman Michael Carroll of Morris County, was quoted in a newspaper article as saying the numbers mean the economy is creating opportunities for everyone. As apologists for this trend toward inequality often do, he cited President Kennedy's observation that "a rising tide lifts all boats," and he warned against dealing with the skewing by raising the state income tax, arguing that "The politics of envy doesn't work. All you will do is scare people off to Florida or Pennsylvania. You want very productive people to stay here."
I'm not picking on the assemblyman. He seems to have been quoted because he is "one of the Legislature's staunchest free market advocates (as though anyone in the Legislature is against the free market). But those assertions need to be beaten back.
First, the numbers show that the economy clearly is not creating opportunity for everyone, unless we believe getting less of the pie than you had a decade ago is cause for celebration. Indeed, the state report found that the big increase for those with six-figure incomes came because these are just about the only people profiting from the sale of stocks, bonds and other financial assets. Such transactions do not create jobs for other people in any meaningful way.
As for JFK, let's point out two things: when he said that, the gap between the rich and the rest was far less than it is today, and the federal income tax was much more progressive, so it called upon the wealthiest to pay more of their fair share.
Scaring people out of New Jersey? Well, why don't we just call off elections and stop choosing politicians to lead us. If we're so afraid the wealthiest will leave New Jersey then they are running this state and we don't need anyone else. More to the point, there are many reasons to choose to live in a particular state and the level of taxes imposed by that state aren't much of a factor. Otherwise New Hampshire, with no income tax, would be bursting at the seams. Indeed, when New Jersey imposed its first state income tax in 1976, who left?
The line about wanting to keep "productive" people here is especially insensitive. I'm not saying the rich don't work hard for what they make. But there are a lot of other people who work pretty hard for what they don't make. Rather than worrying about the rich piling cases of Perrier atop their BMWs and fleeing like Okies from the Dust Bowl, we should show concern for middle class New Jerseyans, especially the elderly on fixed incomes, who can't afford to stay here because their local property taxes are so high.
When we hear people say the last thing we should do is increase the state income tax rate for the wealthiest we should keep this in mind: while it is true that the state income tax has been made somewhat more progressive in recent years by raising the amount the poor can earn before paying it and giving the super-rich a little less of a tax cut, percentage-wise, than everyone else, it isn't enough. The bottom line is that, because they have to pay so much in property and sales tax, middle-class and poor New Jerseyans still wind up giving up a higher percentage of their income for major taxes than do the wealthiest.
We can change that and we should.
A version of this commentary appeared in The Asbury Park Press, Nov. 26, 1999.
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