The good news is New Jersey tax revenues are going up. The bad news is not as much as Governor Murphy thought they would. Murphy's budget was based on a 7 percent increase in tax revenues. Instead, revenues have increased by just under 3 percent. If this trend continues New Jersey will have a 5 billion dollar budget shortfall. Higher revenues generated by the sales tax and corporate tax account for the additional money coming in this budget year. A sign New Jersey is benefiting from the strong national economy. However, revenue generated from the gross income tax is down 6 percent. The gross income tax is New Jersey's largest source of revenue. State Officials hope income tax revenues will climb as returns are filed in March and April. If that doesn't happen a combination of program cuts and possible tax increases will be necessary. Here's what I don't understand. How is it realistic to anticipate a 7 percent increase in revenue for one year? Income tax revenues actually go down when people move out of a state. It looks to me like our Democratic governor and state legislature wanted to add massive amounts of money to the state budget. The 7 percent increase was put out there to make us believe enough money would come in. Just remember, when taxes go up even more people will move away and the vicious cycle will continue. Spend less, tax less and people will stay.
Source: North Jersey.com