The 2008 Budget: False Philanthrophy Continues

Murray Sabrin

The State Legislature passed the $33.5 billion budget on Thursday along party lines. Spending will be $2.7 billion higher than the budget that ends on June 30th. There will be no drama this June compared to last year’s state government shutdown after lawmakers and Governor Corzine failed to reach an agreement on the budget by the June 30th deadline.

From a fiscal conservative perspective, the only good news about the budget is that business taxes will be cut $275 million and consumers will no longer have to pay sales tax on nonprofit health club memberships. In addition, property tax rebates will total $2 billion. Most of the rebates will go to non-senior homeowners earning less than $250,000, senior homeowners and renters. Upper income homeowners get zilch. In short, the redistribution of income is currently cemented in the tax-and-spend philosophy of the Governor and the Democrat controlled Legislature. This brings us to an observation that needs to be debated and discussed in New Jersey and around the nation, namely, what is the underlying philosophy of the tax-and-spend policies of government?

Retiring state senator Bernard Kenny was ecstatic about the budget’s passing:
"Today, we are presenting a budget plan for the coming year that contains record amounts of property tax relief and compassion for those in need.” (Emphasis added)

Why is the State of New Jersey sending the people back some of their tax money? If the people want all the “services” and social spending of state, county and local governments, then the people should be happy to pay all the property and income taxes they are forced to pay to their municipal government and Trenton. By complaining about high taxes, people are really complaining about high spending. Yet, state of local spending rarely declines. And if it does, it is only for one year, at best.

So politicians being the opportunist that they are have come up with gimmicks to placate taxpayers. For example, half of last year’s one percent jump in the sales tax was dedicated to property tax relief. This year voters will be given the opportunity to vote for a constitutional amendment that would dedicate all of the sales tax hike and more to property tax rebates. In other words, government taxes money from one pocket of taxpayers (sales tax hike) and then returns some of it to them in another pocket labeled “property tax rebates.”

This charade will continue as long as the public buys the tax-and-spend philosophy of Corzine and others from both parties. After all, spending skyrocketed in Whitman’s last term (1998-2001) and DiFrancesco’s (2001-2002) one year as acting governor. Republican governors and the GOP controlled Legislature at the time were as culpable as the Democrats for the state’s fiscal mess.

Finally, Senator Kenny’s assertion that the state budget provides “compassion for those in need,” reflects the underlying political culture of our era: redistribution of income. Compassion cannot be expressed by a government budget. Compassion is a human act using peaceful means by individuals and groups. The coercive power of the state for noble ends is not compassion. In fact, more than 150 years ago Fredric Bastiat identified the problem: perversion of the law by the principle of false philanthropy. (See his classic, The Law)

Until the people say No to false philanthropy of the political class, politicians will continue to pose as “compassionate” public servants using other people’s money. And the welfare state will grow and create more dependency on the state, i.e., taxpayers, for false compassion.

Murray Sabrin, Ph.D., is professor of finance in the Anisfield School of Business, Ramapo College of New Jersey, where he is executive director of the Center for Business and Public Policy.