New Jersey’s Gubernatorial Race, Part I: Governor Corzine Proposes 10.75% Income Tax Rate
To evaluate Corzine’s proposed rate increases, one need not even look at New Jersey’s economic performance since the adoption of its “millionaires’ tax” five years ago; double-digit state income taxes have been tried before and failed as fiscal policy. Through the early 1990s, several states maintained double-digit income tax rates, including California (11% until 1996) and Hawaii (10% until 1998). These rates came down due to a combination of booming tax revenues from all sources, and growing expert understanding that location decisions of highly mobile entrepreneurs are sensitive to state income tax rates, particularly in the interstate context. To attract and keep good talent, create jobs and drive economic growth, legislators knew that state tax systems had to be competitive with their neighbors.