THE INCOME TAX: STILL THE ROOT OF ALL EVIL

Murray Sabrin

The following article was first published two years ago on www.etherzone.com It is more relevant today as the Alternative Minimum Tax affects an increasing number of Americans. Despite the Bush tax cuts, our personal tax liability is going through the roof. Just our federal and state income taxes are 18% of our gross income. When you add up the other taxes--property, sales, excise, Social Security, Medicare, etc., I estimate our taxes consumed at least 38% of our income last year. In other words, more than one-third of our income funded the welfare-warfare state. Very little of our taxes was used to pay for services we actually needed—or wanted. The Republicrats are responsible for the redistribution of income and the culture of entitlement. They are the problem, not the solution to the abolition of the welfare-warfare state.

Fifty years ago Frank Chodorov's The Income Tax: Root of All Evil was published. On every page, the case against the income tax is made so convincingly that even the most ardent supporters of the progressive income tax cannot ignore Chodorov's compelling words.

This remarkable little book is one of the best critiques of the income tax. Chodorov, who was editor of the conservative-libertarian weekly, Human Events, when it was more libertarian than conservative, made the case against the income tax by focusing on the "original meaning" of America, namely a nation where government was supposed to protect the people's property rights.


Even the Foreword to Chodorov's The Income Tax: Root of All Evil, written by Utah governor J. Bracken Lee, contains gems that would never be uttered by any state chief executive today, demonstrating how contemporary government officials from both major political parties have embraced big government. And since the publication of Chodorov's classic most states have enacted an income tax to pay for redistributionist schemes.

For example, Lee writes:

The early American…was wary of government, especially one that was out of his reach…He recognized the need of some sort of government, to keep order, to protect him in the exercise of his rights…But, he wanted it understood that the powers of that government would be clearly defined and be limited; it could not go beyond specified limits. It was in recognition of this fear of centralized power that the Founding Fathers put into the Constitution-it never would have been ratified without them-very specific restraints on the federal government.

In other matters, the early American was willing to put his faith in home government, in a government of neighbors, in a government that one could keep one’s eyes on and, if necessary, lay one’s hands on. For that reason, the United States was founded as a Union of separate and autonomous commonwealths. The states could go in for any political experiments the folks might want to try out-even socialism, for that matter-but the federal government had no such leeway. After all, there were other states nearby, and if a citizen did not like the way one state government was managing its affairs, he could move across the border; that threat of competition would keep each state from going too far in making changes or in intervening in the lives of the citizens.

The Constitution, then, kept the federal government off balance and weak. And a weak government is the corollary of a strong people. (Emphasis added)

Governor Lee's foreword is must reading for all American who care about the future of our country. His stirring words make the current crop of governors sound like third rate political hacks.

Chodorov's words are no less inspiring.

In the American political tradition, which claims kinship with Judeo-Christian morality, all is "evil" that violates the doctrine of natural rights, as set down in the Declaration of Independence…The American tradition rests its case squarely on the premise that the human being is endowed with rights by his very existence; that is what makes him human. Hence, any political action which attempts to violate these rights violates his human-ness, and thus becomes "evil."

The Constitution of the United States is a manmade instrument; it has no other sanction. Yet it has won acceptance with Americans as the yardstick of political "good," because it was conceived as a practical instrument for the prevention of transgressions of our rights, either by the government or by citizens….

The Constitution, then, is held in high esteem only because of the high esteem Americans put upon the doctrine of natural rights. Any law, political practice, or even amendment that infringes those rights is automatically deemed "unconstitutional." The infringement is "evil." (Emphasis in original)

With this definition of "evil" in mind, it is the purpose of this book to show that many laws and governmental practices are impregnated with it, and to trace this wholesale infringement of our rights to the power acquired by the federal government in 1913 to tax our incomes-the Sixteenth Amendment. That is the "root."…

In the case of the practices resulting from income taxation, it will be shown that most of them are demanded or supported by large segments of society; the government merely compounds the evil. A people who are intent on getting something-for-nothing from government cannot cavil over the infringement of their rights by that government; in fact, if the price demanded for the gratuities is the relinquishment of rights, they are not averse to paying it. There is evidence enough that this trade is often made, and that the government is able to enter into it because of its income-tax revenues.

Unfortunately, Chodorov's insights fifty years ago have been validated by a succession of Republican and Democrat administrations. If people complain about high taxes, they do not have anyone to blame but themselves. The people have allowed the federal government to tax them for so-called public goods, which have expanded exponentially since the income tax was enacted in 1913.

From the New Deal to Truman's Fair Deal to Eisenhower's big government Republican administration to the Great Society to Nixon's big government Republicanism to Jimmy Carter's expansion of the welfare state to Reagan's "saving" of Social Security to George Bush's welfare-warfare state administration to Clinton's tax hikes to G.W. Bush's welfare-warfare state polices, all the "evil" of the past seven decades was made possible because the federal government had the power to tax incomes directly.

To be fair and balanced, the Washington political elite has sold a bill of goods to the American people for decades, namely, more government spending will improve the people's lives. And inasmuch as enough Americans believe that their elected officials are working for their best interests, federal government spending has increased to $2.3 trillion---and rising.

The key to reversing the "mind-set" of the American people is for tens of millions of Americans to read Frank Chodorov's classic. When the people demand the repeal of the Sixteenth Amendment, then April 15th will be just another day of the year instead of a symbol of the "evil" income tax.

If you want to rid America of the institution that is responsible for more destruction except for war, please forward Chodorov's e-book to as many people as possible. We can overturn the counterrevolution of 1913. All the American people need is the right "ammunition".

The Welfare State: A Gross Abomination

Murray Sabrin

Throughout the state citizens have had the opportunity to comment about Governor Corzine’s 2007 budget. Everyone who testifies before the Senate Budget and Appropriations Committee is given five minutes to speak, and copies of their testimony are distributed to the senators. In addition, citizens’ testimony is supposed to be posted on the state’s website.

Last Monday I testified before the Senate Budget and Appropriations Committee at Bergen Community College. Dozens of speakers before and after me pleaded, begged, and argued for more money for social welfare services or higher education or public schools.

While I was listening to the testimony I felt I was living in a medieval society where the king’s emissaries were dispatched to the countryside to hear the peasants plead for their sustenance. I do not blame people pleading for money. After all, the “king” and his allies--legislators—plunder society, and the peasants want some of that money for a dazzling array of government programs.

In the final analysis, the welfare state creates a dependency situation that is financially unsustainable and morally untenable. We need to begin the transition to a society based on voluntary assistance with nonprofits as the only providers of social services. Nonprofitization would be less expensive than the welfare state and more effective than welfare bureaucracies. In short, we need social entrepreneurship to replace the sad pleadings of our fellow citizens.

Unfortunately, legislators and a substantial number of our citizens are unwilling to let go of the welfare state—for now. They still cling to the notion that the state is virtually an unlimited spigot of money. The current budget crisis is a wakeup call to the governor, legislators, and the public.

Governor Corzine wants to balance the budget without gimmicks so he can grow the welfare state in the future, when he believes more state revenue will flow into the Treasury which would allow him to open up the spigot in future years.

Governor Corzine’s budget can be summed up in one sentence: “From each according to his ability to each according to his needs.” In addition, the governor is creating a very steep progressive income tax system, by exempting more low income workers from the tax rolls.

As the proponent of a tax-free society, I applaud the governor eliminating taxes on some of our citizens. However, we should abolish the income tax for everyone. Instead, the governor wants upper and middle income earners to pay for the welfare state, because that his philosophy, his ideology, is that the coercive redistribution of income is noble and moral. I reject that idea completely.

Governor Corzine’s budget needs to be altered. Taxes should be cut, the budget should be reduced and regulatory relief needs to be enacted. All these proposals would make New Jersey more attractive for new businesses.

Instead, in one section of the budget the governor’s budget calls for “a provider assessment of 5.5% based on non-Medicare hospital revenue that will generate $430 million. Of the total, $215 million will become a State budget resource. The remaining $215 million will generate federal Medicaid match, resulting in a total of $430 million that will be distributed to hospitals in the form of higher Medicaid payments. This initiative, which will benefit hospitals that have a higher than average Medicaid client base, will require State legislation.”

This is an example of another gimmick in the state government’s arsenal to raise more money buy using the federal welfare state. If the governor’s proposal is not a violation of the law, then it is a gross violation of the spirit of the Medicaid law. Nonprofits are tax exempt. For the governor to “assess” hospitals, i.e., impose a tax them, then Corzine is manipulating the system to bring more revenue into New Jersey’s welfare state.

Governor Corzine is fighting the last war. There is enough wealth and compassion in New Jersey to help our most vulnerable citizens. One day both the Democrats and the Republicans will begin the transition to a free society. In the meantime, we have to point out how the welfare state is sapping our strength and wasting our money.

Putting New Jersey on the Road to Liberty and Prosperity

To: Hon. Wayne R. Bryant, Chairman
Senate Budget and Appropriations Committee

Testimony of Dr. Murray Sabrin, Professor of Finance, Ramapo College of New Jersey
Before the Senate and Budget Appropriations Committee, Bergen Community College
April 3, 2006

Good afternoon. I would like to thank the Committee for the opportunity to discuss the Fiscal 2007 Budget.

We are at a crossroads in New Jersey. For years, governors of both major political parties have engaged in fiscal practices, if undertaken in the private sector, would have led to indictments of business executives. I therefore applaud Governor Corzine for attempting to restore honesty in the budget process. Unfortunately, honesty alone will not solve the state budget crisis.

Yogi Berra said when we come to a fork in a road we should take it; members of the Legislature and Governor Corzine have to take the correct fork in the road if the state’s fiscal condition will come off life support.

For the state budget to be balanced instead of in perpetual crisis, public officials must acknowledge former Governor Florio’s observation in one of his last budgets, namely, government tries to do too much. Moreover, Governor Corzine also got it right in his Budget Address when he said: “I think the values of most New Jerseyans include the expectation that as individuals, and as a community, we must pay our own way in life.”
(Emphasis added)

For example, Newark is a ward of the state, with taxpayers picking up 44% of the cost of municipal government and schools. This is unfair to the state’s taxpayers. All the state’s urban centers must become financially independent over the next few years. The Legislature must begin to nurture Newark and other cities back to financial independence immediately.

The time for tinkering is over; the state budget must be restructured. The state budget must be reduced by billions of dollars. A lower state budget would reflect the common good instead of the needs of specific individuals, groups and communities.

In short, the state’s fiscal crisis is as much a philosophical crisis as it is a financial one.

The culture of entitlement and redistribution of income is so ingrained in the collective psyche of policymakers and many segments of the public, that few individuals can conceive of a society based on low taxes, less spending, less regulation, and limited government. Instead, too many of our citizens believe government’s prime responsibility is to be the social worker, the healthcare provider and the source of income for many of our families.

Policymakers must embrace economist Ludwig von Mises’s insight: “The government and its chiefs do not have the powers of the mythical Santa Claus. They cannot spend except by taking out of the pockets of some people for the benefit of others.”

In other words, the redistribution of income is not only wrong, but in the final analysis is an unsustainable policy. People still have the freedom to vote with their feet.
And everyday productive citizens are leaving New Jersey for more hospitable states.

The trend is reversible, but not by wishful thinking, hand wringing or political posturing.

The time for partisan bickering is over. Policymakers must support unequivocally sound financial principles and limited government, if they want to put the state’s books in order and provide a friendly climate for the business community.

The state’s economy will not be robust if taxes are hiked. The Governor is engaging in wishful thinking if he thinks higher taxes will grow the state’s economy. With New Jerseyans having the second highest tax burden in the United States, higher taxes will not kick start the state’s economy.

On the contrary, taxes should be reduced so businesses and individuals will have additional funds to invest in new technologies and innovations, and keep more of the fruits of their labor.

The free enterprise system is the means to create high paying jobs, create wealth and raise the standard of living of everyone willing to work. State government, therefore, should take its appropriate place in society…limited to protecting the lives, liberties and property of the people.

The following recommendations are consistent with the principles outlined in the state constitution—freedom, liberty, and protecting property rights:

• Amend the Constitution to abolish the “thorough and efficient” education clause, giving the Legislature control over school spending
• Amend the Constitution preventing the Supreme Court from ordering the Legislature or the executive branch to spend money for any purpose
• Amend the Constitution giving land use decisions back to the people or their elected representatives
• The state should implement forensic accountants Rosenfarb Winters recommendations regarding the Abbott Districts, which would save at least $282 million
• Equalize state education aid. Every school district would get the same state aid per student as every other school district
• Implement education tax credits for individuals, families and businesses
• Institute zero based budgeting—all state agencies must justify every dollar it spends
• Reduce the sales tax by one cent every year for three years
• Reduce the personal income tax and the Corporate Business Tax
• Eliminate the income tax on pensions
• Eliminate property tax rebates, saving $1.5 billion per year
• Begin the transition making the state colleges, Rutgers University, and the University of Medical and Dentistry of New Jersey financially independent
• Eliminate all state grants to nonprofits
• End municipal grants
• Release nonviolent drug offenders from prison
• Raise the gas tax 20 cents per gallon only for road and bridge projects
• Kill the Transportation Fund bond issue
• End state government grants, loans, subsidies for businesses
• Abolish unnecessary business regulations
• Repeal the Highlands Act…the greatest violation of private property ownership in the history of the country
• Eliminate dual office holding
• Eliminate pensions for part-time government employees
• Eliminate pensions of legislators

These recommendations are based on several principles, namely, that state government is overstretched, and that the private and nonprofit sectors provide the goods and services the public want more effectively than government.

As the late management consultant and social analyst Peter Drucker observed nearly 15 years ago, “Federal, state and local governments will have to retrench sharply, no matter who is in office. Moreover, government has proved incompetent at solving social problems. Virtually, every success we have scored has been achieved by nonprofits.”

Throughout New Jersey individuals are not waiting for government to solve social problems. In Red Bank, the Parker Family Health Center under the leadership of Dr. Gene Cheslock is providing health care to the uninsured at virtually no cost to taxpayers. In Somerset County Doctors John and Alieta Eck are treating the uninsured at the Zarephath Health Center. These are just two examples of the spontaneous acts of caring by compassionate individuals. We need to encourage social entrepreneurship in every county to address the needs of the most vulnerable in our state.

The ball is the court of both the Legislature and the Governor. They can preserve the status quo, or they can reject the tax, spend, and borrow philosophy that has put the state on the brink of financial collapse…and they can take the road labeled Liberty and Prosperity, the state motto, by adopting sound financial principles and limiting the size and scope of state government. That’s the choice before policymakers.

Thank You.

Corzine’s Conservatism Revealed

Murray Sabrin

The details of Governor Corzine’s proposed 2007 $30.9 billion budget were presented in his address to the Legislature last Tuesday. The broad outline of Corzine’s budget includes hiking taxes nearly $1.5 billion, eliminating the state income tax for residents earning less than $25,000, cutting some programs, increasing several programs, abolishing others, continuing property tax rebates of $1.5 billion, funding pension obligations to the tune of $1.1 billion, and freezing school and municipal aid. When all the numbers are crunched, the budget still will increase by more than 9 percent.

The Governor is trying to fix the sins of the past by remaining true to his ideology--income redistribution and progressive taxation. Except for the sales tax hike to 7 percent, a regressive tax if there ever was one, Corzine proposes removing low-income individuals and families from the income tax rolls, thereby softening the blow of a higher sales tax. Corzine also increase funding for FamilyCare health insurance, rental assistance, and other programs for low-income families. In short, Corzine is maintaining the status quo, the hallmark of a “conservative.”

Throughout his budget address there are smatterings of libertarian and big government ideas. In the beginning of his budget address, Corzine stated, “I think the values of most New Jerseyans include the expectation that as individuals, and as a community, we must pay our own way in life.” In other words, every adult must be financially independent---the essence of personal responsibility—a point I made over and over in the 1997 gubernatorial campaign.

Two sentences later Corzine makes this observation: “And, most New Jerseyans understand that the character of a society can be measured by the support we give to our most vulnerable -- our children, the elderly and those left behind developmentally or from other afflictions of life's circumstances.” He implies that it is the government’s responsibility to take care of some members of society. However, children are the responsibility of parents; the elderly are the responsibility of their children; and the inflicted are the responsibility of their family, friends and community—the network of social—nongovernmental—organizations whose mission is to care for the infirmed.

A moral society is based on the values of individualism and community. The welfare state, on the other hand, is constructed on legal plunder, and it is running out of money, a point Corzine made in his address when he said, “And boy, does this budget hurt.” Too many people have become dependent on the political establishment’s largesse for their needs.

Corzine proposes to downsize state government. He stated: “With no pleasure, I propose cuts and constrained growth …of almost $2 billion. To that end, we have eliminated 75 programs, we have reduced funding for 130 programs below the current level, and we have cut back the growth of another 30 programs.” In other words, the state has been funding programs for decades that are dispensable.

In 2006 we are witnessing Peter Drucker’s 1991 observation that “Federal, state and local governments will have to retrench sharply, no matter who is in office.” Unfortunately, Drucker did not realize that George W. Bush would be president since 2001 and has done his best to expand the welfare state at the federal level. But at the state level, epitomized by New Jersey’s Republicrats’ bloated budgets for the past two decades, the welfare state is kaput.

Governor Corzine is facing the stark reality that raising taxes to close the budget gap would be the death knell for the economy. He has no choice but to cut spending, and yet the budget still increases by more than 9 percent next year. This is how perverse the welfare state has become. Despite spending cuts, the 2007 budget would grow by more than twice the rate of inflation.

What’s the solution? Only constitutional spending should be funded, and everything else the people want would be supplied by the private and nonprofit sectors. The transition would take about five years—or less-- to complete. The transition to a limited government regime in Trenton must begin ASAP. The longer we wait, the more “painful” the devolution to a free and prosperous New Jersey.

(Monday, March 27, 12:30pm-1:30pm. The Coming Collapse of the Welfare-Warfare State, Spring Distinguished Lecture. Bergen Community College, Student Life, 400 Paramus Road, Paramus, Room TEC-128. 201-447-7215.)

Murray Sabrin, Ph.D., is professor of finance in the School of Business, Ramapo College of New Jersey, where he is also executive director of the Center for Business and Public Policy, www.ramapo.edu/cbpp.

Another Failed Attempt to Save New Jersey’s Welfare State

Murray Sabrin

In numerous leaks last week the Corzine administration floated several trial balloons regarding tax hikes and budget cuts that the governor presumably will propose tomorrow to close the $4.5 billion gap in next year’s budget.

Not surprisingly, Governor Corzine is proposing more of the same—big government--medicine--a one percent sales tax hike that will be levied on more services, higher taxes on cigarettes, cuts in some programs, and higher property tax rebates. And yet the state budget will still increase by at least $2 billion to more than $30 billion. In other words, New Jersey’s welfare state will keep on growing.

Governor Corzine’s strategy is to get the budget balanced so the state’s economy will grow in future years, when more tax revenue will allow his administration to increase entitlement spending without any tax increases. In addition, the Governor wants to risk taxpayer money on stem cell research and other initiatives to boost the state’s economy.

At this point in time the Governor’s prescription does not appear it will not generate much opposition from the public. The Governor and his minions have been conditioning the public for the “inevitable.” As a former Wall Street CEO with and a non threatening persona, Governor Corzine is for the time being getting a “pass” from the public for the mess he inherited—from former Governor Codey, who still has a very favorable public approval rating. Go figure.

Of course, McGreevy, DiFrancesco and Whitman also share responsibility for their reckless spending and borrowing during their tenure in the governor’s office.

The Governor’s $30 billion 2007 budget, tax hikes and higher property tax rebates, will not put New Jersey’s state government on the path to fiscal responsibility. As long as the entitlement culture is alive and well in the Statehouse, there will be more fiscal crises in the future.

New Jersey needs a massive restructuring of state government that will eliminate hundreds of programs, end the redistribution of income, reduce taxes and abolish unnecessary regulations.

We are in a cultural crisis. The budget shortfalls are a manifestation of the welfare state philosophy that is embraced by the Republicrats in Trenton and Washington. Spending, taxing, and borrowing continue unabated no matter which of the major parties is in charge of the government. In short, there will not be a political solution to our dilemma.

The markets will force the politicians to restructure government. You can count on the most sensitive indicator of government misfeasance and stupidity—the markets—to force the collectivists to downsize government. There is ample historical evidence that governments cannot mismanage the welfare state indefinitely. So enjoy yourself while you can, it is going to be a rough few years as the distortions of the welfare state work themselves out in Trenton and DC.

In the meantime, tomorrow will know the details of Governor Corzine’s attempt to maintain New Jersey’s welfare state. We should not expect any surprises.


(Monday, March 27, 12:30pm-1:30pm. The Coming Collapse of the Welfare-Warfare State, Spring Distinguished Lecture. Bergen Community College, Student Life, 400 Paramus Road, Paramus, Room TEC-128. 201-447-7215.)

Murray Sabrin, Ph.D., is professor of finance in the School of Business, Ramapo College of New Jersey, where he is also executive director of the Center for Business and Public Policy, www.ramapo.edu/cbpp.

The Sabrin Plan for Fiscal Sanity

Murray Sabrin

“The government and its chiefs do not have the powers of the mythical Santa Claus. They cannot spend except by taking out of the pockets of some people for the benefit of others.” Ludwig von Mises, Planning for Freedom, p.187

“…Government has proved incompetent at solving social problems…virtually every success we have scored has been achieved by nonprofits.”
Peter F. Drucker, Wall Street Journal, December 19, 1991

“Socialism and interventionism. Both have in common the goal of subordinating the individual unconditionally to the state.” Ludwig von Mises, Omnipotent Government, p.44


Last Tuesday I attended Governor Corzine’s “dialogue” with the public at Montclair State University. Treasurer Bradley Abelow presented an outstanding PowerPoint presentation of the state’s fiscal crisis, underscoring how Governor Corzine’s predecessors—both Republicans and Democrats, the Republicrats—created the budget mess. Corzine pointed out that if nothing is done, next year state spending will increase $4.9 billion. At this time, the 2007 budget deficit is projected to be $4.55 billion. Corzine said there will be unspecified budget cuts, unspecified tax hikes, but no layoffs of state government employees.

(Corzine’s PowerPoint slides can viewed at http://www.state.nj.us/budget06/dialogues/summit.html)

Governor Corzine wants to “grow” the state economy, so revenues will increase 8-9 percent annually instead of the current 3% per annum. The additional revenue in two years and beyond will be used to restore next year’s cuts and increase state government “investments” in stem cell research and other biotech areas. In short, the Governor wants to create more “public-private” partnerships.

The state’s economy will not be robust if more taxes are imposed on businesses and high income earners. The Governor is engaging in wishful thinking if he thinks higher taxes will not cause companies to reconsider relocating to New Jersey or businesses to reconsider expanding their operations in the Garden State. With New Jerseyans having the second highest tax burden in the United States, does Corzine believe higher taxes will kick start the state’s economy?

If there is one clear message from Governor Corzine’s presentation, it is this: he is an unapologetic supporter of big government. He wants an efficient welfare state in New Jersey. He wants many businesses to be dependent upon the state for loans, subsidies, grants, etc. Instead, he should reduce taxes on businesses and individuals so capital will be freed to invest in new technologies and innovations. In short, free enterprise is more productive than government intervention. State government should then take its appropriate place in the state…it will become irrelevant in the economy. Finally, we will have the appropriate division of labor that will create sustainable prosperity in New Jersey. Government would be protecting individual rights and businesses would be providing goods and services the people want-- and creating jobs.

In the meantime, next week Corzine will reveal his plan to fix the state’s budget mess. Below is my set of recommendations to restore fiscal sanity in New Jersey, slightly amended from the one I gave Treasurer Abelow and his aide for the Governor to review. All these recommendations are consistent with, freedom, liberty, and “good” government--protecting property rights, assisting individuals in local communities, and creating sustainable prosperity in New Jersey.

Your suggestions?

• Amend the Constitution to abolish the “thorough and efficient” education clause
• Amend the Constitution preventing the Supreme Court from ordering the Legislature or the executive branch to spend money for any purpose
• Amend the Constitution giving land use decisions back to the people or their elected representatives
• Implement forensic accountants Rosenfarb Winters recommendations regarding the Abbott Districts, which would save at least $282 million, for starters
• Equalize state education aid. Every school district would get the same state aid as every other child in the state
• Implement education tax credits for individuals, families and businesses
• Institute zero based budgeting—all state agencies must justify every dollar it spends
• Eliminate property tax rebates, saving $1.5 billion per year
• Begin the transition making the state colleges, Rutgers, and the University Medical and Dentistry of New Jersey financially independent
• Make all nonprofits financially independent, eliminate all state grants
• Release nonviolent drug offenders from prison
• Raise the gas tax 20 cents per gallon only for road and bridge projects
• Kill the Transportation Fund bond issue
• Reduce the sales tax by one cent every year for three years
• Reduce the personal income tax and the Corporate Business Tax
• End state government grants, loans, subsidies for businesses
• Eliminate the income tax on pensions
• Abolish unnecessary business regulations
• Repeal the Highlands Act…the greatest violation of private property ownership in the history of the country
• Eliminate dual office holding
• Eliminate pensions for part-time government employees
• Eliminate pensions of legislators
• Distribute copies of the New Jersey Constitution to all members of the administration, the Legislature and the Supreme Court. Have them take a test on the Constitution. If they do not pass, they should be removed from office.
• Eliminate pensions of legislators who voted for debt, excessive spending, higher taxes, and unnecessary regulations
• Remove paintings of former governors in the Statehouse

Murray Sabrin, Ph.D., is professor of finance in the School of Business, Ramapo College of New Jersey, where he is also executive director of the Center for Business and Public Policy, www.ramapo.edu/cbpp. He is a contributing columnist for NJBIZ.

Don’t be a Girlie Man, Governor. Raise the Gas Tax…Cut the Sales Tax

Murray Sabrin

New Jersey is on the wrong road…the road to bankruptcy and a weak—very weak-- economy because the Republicrats have been taxing, spending, borrowing and regulating businesses (unnecessarily) for decades. Apparently, Governor Corzine wants to continue at least a couple of these polices with his proposal to refinance a portion of the Transportation Trust Fund (TTF) and borrow more money to avoid increasing the gas tax. This may be good politics for the Governor but a lousy deal for taxpayers and motorists

(We will have to wait until March 21st to get the details of the 2007 budget and learn who Corzine will stick it to to balance the budget.)

The tax burden on the people is what government spends and borrows. Taxes paid today and in the future reflect the government’s current and future expenditures, its liabilities. Unless people make gifts totaling in the hundreds of millions of dollars to the state Treasury over the next 30 years, any new debts the state incurs will have to be paid by the people in the form of higher taxes—gasoline or other taxes to pay off the 30 year bonds Corzine wants to issue to replenish the TTF. Or, spending could be cut to free up money to pay for increased debt payments. Don’t count on it.

To insure that the roads are improved, the Governor should raise the gas tax 20 cents per gallon, which would cost the average motorist about $2-$4 extra per week. These funds should only be used for highways, roads and bridges. No more debt, period.

The TTF was created on a pay-as-you-go basis. Projects would be funded each year by the gas tax. Unfortunately, the TTF has also been used for mass transit projects and general operating expenses. In short, it was raided. Have the raiders been caught and punished? Of course not. This is New Jersey. No bad fiscal deed gets punished.

Mass transit should be funded on a pay-as-you go basis, and long–term debt should be used for capital expenditures. Motorists and taxpayers should not fund mass transit. The fare box and tight management controls should put revenues and expenses, including interest costs, in balance.

There is no free lunch. There is no tooth fairy or Easter Bunny. Taxpayers pay for government. Politicians have been trying their best to convince the public that government debt is not really a liability of taxpayers. And even some politicians think debt is costless. One member of the Legislature did not realize that bonds issued to pay for the school construction boondoggle had to be paid back. (This was told to me by Star- Ledger columnist Paul Mulshine who repeated it at the Business and Financial Outlook Roundtable last December. With dimwits like this in the Legislature it is no wonder the state’s finances are in such sad shape.)

Governor Corzine is a self-proclaimed “progressive,” which means he thinks more with his heart than his head. He wants to make New Jersey a much better best place to do business. To achieve this goal, he needs to begin the transformation of New Jersey’s welfare state.

The State of New Jersey should begin weaning nonprofits and other nongovernmental agencies off taxpayers’ teats. By cutting the sales tax at least one cent in fiscal 2007, hundreds of millions of dollars would remain with taxpayers who would then have the opportunity to fund the nonprofits they prefer. This approach would get resources to nonprofits directly and be more cost effective than relying on government grants and bureaucracies shuffling monies around the state. If people argue this is unrealistic because the people won’t donate to local social service agencies, colleges, hospitals and other organizations that currently get some of their revenue form the state, I ask them to stop and think what they are saying. Supposedly the people of New Jersey, a blue state, place a high priority in helping their fellow human being and the institutions that service the needs of people less fortunate than they are. If people don’t support the nonprofits, then the people will have spoken: the hell with everyone else.

Why voluntarism is considered “unrealistic” and, for some, repugnant, while the welfare state, which is based on coercion-- the massive use of force--is considered humanitarian? In our Orwellian world, coercion is good and voluntary giving is tacky. This is perverse. Our culture is now based on the principles of plunder. When governments tax—i.e., plunder---and spends the booty on “worthy” programs, politicians, academics, and the pundit class think that is good.

We have traveled far down the road of velvet fascism. We can get off and take the free enterprise- limited government highway instead. In the meantime, every government program is considered untouchable because it has a worthy goal, i.e., Social Security, Medicare, Medicaid, and public education, among others. The Big Three federal government programs are financially unsustainable. That’s just a fact of life. Public educations costs in New Jersey are increasing faster than the ability of taxpayers to fund the system. Something has to give.

Will Governor Corzine listen to his heart and maintain the status quo? Or, will he let his head do the thinking about what needs to be done--downsizing the budget, reducing taxes, and abolishing unnecessary regulations-- to put the state’s economy on the right track?

(Monday, March 27, 12:30pm-1:30pm. The Coming Collapse of the Welfare-Warfare State, Spring Distinguished Lecture. Bergen Community College, Student Life, 400 Paramus Road, Paramus, Room TEC-128. 201-447-7215.)

Murray Sabrin, Ph.D., is professor of finance in the School of Business, Ramapo College of New Jersey, where he is also executive director of the Center for Business and Public Policy, www.ramapo.edu/cbpp.

Why You Should Love the State, Part 2

Murray Sabrin

Last Friday, Governor Corzine confirmed what had been reported in the press for the past two weeks. Corzine announced the state will borrow billions for 30 years to refinance outstanding bonds and replenish the Transportation Trust Fund. In addition, some of the funds will be used to repair and expand mass transit. Corzine will not call for a gas tax increase, and he will take the 1.5 cents of the gas tax that had been funding general operating expenses and use it for transportation projects.

Hallelujah. Imagine that…taxpayers’ money remaining in a trust fund to be used for a dedicated purpose, instead of the money being looted for the bloated state budget. Where are the investigations? There will not be any investigations, because the Republicrats have been complicit in plundering taxpayers for years.

Governor Corzine is refusing to hike the gas tax, because he will propose raising other taxes in his budget address on March 21, and certainly does not want to be “Florioized.” In 1990, Governor Jim Florio raised the income tax and the sales tax in his first year in office, after asserting during the 1989 gubernatorial campaign that taxes did not have to be raised. The tax revolt ignited by Florio’s policies led to the GOP takeover of the Legislature in 1991 and the election of Christie Whitman in 1993.

The last thing Governor Corzine wants is a Republican controlled Legislature after the 2007 elections. Thus, his tax increase proposals will mainly fall on high income individuals and businesses—voters who are not that great in numbers to elect a GOP majority in 2007. But given how inept the Republicans have been for years, Corzine should not lose any sleep about the GOP charging up the hill in 2007 to take over the Legislature.

If Governor Corzine’s bond proposal is passed by the Legislature, there will a collective sigh of relief in law offices and investment banking firms in New Jersey and New York. Their incomes will be not be jeopardized. In addition, the Democrats, the majority party in both houses of the Legislature, will not have to vote to hike gas taxes before next year’s election, sparing them the wrath of the voters.

Governor Corzine has shown how to continue the gravy train. His version of “trickle down” economics is setting the standard for keeping power and not raising the most visible of all taxes, the gas tax. Moreover, upscale retailers, automobile dealers and other suppliers to the rich and famous—or not so famous--in the legal and investment communities will see their sales hold steady. Cash registers will continue to ka-ching. Sales taxes will stay strong, higher income taxes will flow to the Treasury, and real estate sales will remain robust. In short, Corzine’s bond initiative will ensure that no lawyer or investment banker millionaire will be left behind.

As time goes by we will realize the best and brightest are governing the state. Attorney General Farber just leaves us breathless, with her repartee with senators at her confirmation hearing. We need more state officials who ignore bench warrants for their driving. Hell, if ignoring bench warrants is good for the AG, then why not for the rest of us, thereby unclogging the courts and lowering criminal justice costs? This is a sure money saver for the state.

And while the best and brightest are in office, we can now be confident they will tackle all the human failings we see all around us.

Governor Corzine and his fellow “compassionate progressives” who he has appointed to his cabinet and other agencies want to keep the people of New Jersey fit and happy. Don’t be surprised if they use their power to prevent us from drinking too much, eating the wrong foods, smoking too much, gambling too much, driving too fast, losing our temper, or using our property recklessly. The best and brightest in Trenton are setting a tone for such high ethical standards that no one in New Jersey will ever tell a lie again.

People are weak. They are reckless. That’s why God invented the state. Divine intervention is problematic, so God’s agents, Democrats and Republicans, in Trenton, in counties and in towns are ready to do God’s work. Men and women cannot take care of themselves, properly raise their children, save for their future, provide for their healthcare, and on and on, so we should be grateful that we have leaders like Corzine and others who want to create a “Paradise on Earth.” Okay, at least in New Jersey.

Instead, the people whine that their taxes are too high, regulations are too onerous, and their property is not fully protected. Don’t you get it? They are working for us---to make life better for each and every New Jerseyan.

I, for one, am grateful for the Corzine administration. All human needs will be met and all human weaknesses will be ended by the end of Corzine’s first term. There will be no need for a second Corzine administration. In 2009, it will not matter who is elected governor, because Corzine and his team will have cemented the cradle to grave welfare state in New Jersey. And the people will love it because virtually all their needs will be provided by Trenton and local governments. Karl Marx will be smiling in his grave.

(Monday, March 27, 12:30pm-1:30pm. The Coming Collapse of the Welfare-Warfare State, Spring Distinguished Lecture. Bergen Community College, Student Life, 400 Paramus Road, Paramus, Room TEC-128. 201-447-7215.)

Murray Sabrin, Ph.D., is professor of finance in the School of Business, Ramapo College of New Jersey, where he is also executive director of the Center for Business and Public Policy, www.ramapo.edu/cbpp.

Why We Should Love More State Borrowing, Part I

Murray Sabrin

Last week we learned that Governor Corzine will propose to borrow at least $6 billion to refinance the bonds owed by the Transportation Trust Fund (TTF), and use much of the money to fix the state’s roads, highways and bridges. The infusion of money will replenish the trust fund without raising the gas tax. Moreover, the new bonds will be paid off in 30 years, thereby lowering the state’s yearly principal and interest payments.

New Jerseyans should applaud Governor Corzine’s proposal because it accomplishes so much good for the people and businesses of New Jersey as well as families and enterprises in the rest of the New York metropolitan region. In addition, replenishing the TTF also allows the Governor to fulfill two campaign promises: 1) holding the line on the gas tax, 2) investing and growing the economy.

Corzine’s stroke of financial sophistication will undoubtedly not be appreciated by the unwashed motorists and the state’s taxpayers. Motorists have been paying into the TTF for the past two decades believing that their taxes would be used wisely by the Republicrats to keep the state’s highways and byways in great shape. So what if New Jersey’s roads, highways and bridges are not smooth as glass as they should be after the people have been taxed to the tune of nearly $9 billion since 1986. Politicians aren’t perfect. Cut them some slack.

Despite the pothole-laced roads and crumbling bridges throughout the state, the billions borrowed by Florio, Whitman, and McGreevey have had an enormous positive impact on the state economy and regional businesses.

The billions that the state has borrowed boosted the income of Wall Street and New Jersey bond lawyers and investment bankers. They in turn have kept the high end real estate market bubbling for 20 years in New Jersey, New York, Long Island and Connecticut. The denizens of debt also kept retail sales humming in Tiffany, Saks Fifth Avenue, Neiman Marcus and all the other upscale retailers in the Short Hills Mall and Garden State Plaza.

Let’s not forget how the fees generated by New Jersey’s ballooning debt propelled luxury automobile market sales higher throughout the region. And while we are totaling up all the economic benefits past legal and investment fees did for the regional economy, we have to include all the second homes bought by lawyers and investment bankers in Aspen, Boca Raton, Cape Cod, and other U.S. and international locations.

As demand for luxury homes, furnishings, automobiles, jewelry, clothing, restaurant meals, vacations, and other goods and services soared along with the TTF’s debt, sales tax and income tax receipts also rose. In addition, the wages and salaries of low and middle income workers increased as more private sector workers were hired during the past two decades to provide services for the upper crust. And more local and state workers were also hired to meet the public service needs of the rich as they moved into upscale neighborhoods around the state.

Tax cuts for the rich, according to Democrats, are a giveaway to the people who do not need to have their after-tax income reduced. Well, not quite. The multiplier effect of more state debt boosts the income of upper income families and individuals in the legal and finance communities, who in turn spend and invest, fueling the economy and providing capital for new jobs. Upper income folks tend to save more than low-income families, thus giving a lift to the stock market.

Trenton Republicrats—primarily Democrats--understand the importance of issuing more state debt so the underwriting fees earned by bond lawyers and investment bankers will be used to prime the pump in New Jersey’s economy.

Governor Corzine wants to keep the money flowing to his friends in the financial community on Wall Street. Moreover, what the hell are friends for in high places if they cannot take care of you?

In the final analysis, Governor Corzine’s bond refinancing proposal is nothing short of financial genius. As a bear market will soon arrive on Wall Street, Wall Street’s investment bankers will feel the pinch. And the last thing the regional economy needs is a precipitous drop in the incomes of lawyers and investment bankers. Sales would plunge in Short Hills, Garden State Plaza and other malls in the tri-state area. Luxury home sales would drop; auto sales would take a beating. Thus, the economic consequences would be catastrophic.

Governor Corzine’s bond refinancing is just what the doctor ordered to avoid an economic meltdown in New Jersey.

(I am speaking at Bergen Community College, Paramus, March 27th, 12:30pm. My topic is, "The Coming Collapse of the Welfare-Warfare State." For more information, see http://www.bergen.edu/clife/SLSPRING06.pdf)


Murray Sabrin, Ph.D., is professor of finance in the School of Business, Ramapo College of New Jersey, where he is also executive director of the Center for Business and Public Policy, www.ramapo.edu/cbpp.

Gambling, Condos and the Rule of Law

Murray Sabrin

Last Wednesday the Star-Ledger ran two front page stories: “Cops: Coach, trooper ran betting ring” and “Homeowners get nod over association rules.” The reporting of these stories on the front page highlights how the rule of law in America has been turned on its head.

The purpose of the law is supposed to protect our persons and property from aggression and theft. Frederic Bastiat spells this out in his classic, The Law:

“Each of us has a natural right — from God — to defend his person, his liberty, and his property. These are the three basic requirements of life, and the preservation of any one of them is completely dependent upon the preservation of the other two. For what are our faculties but the extension of our individuality? And what is property but an extension of our faculties? If every person has the right to defend even by force — his person, his liberty, and his property, then it follows that a group of men have the right to organize and support a common force to protect these rights constantly. Thus the principle of collective right — its reason for existing, its lawfulness — is based on individual right. And the common force that protects this collective right cannot logically have any other purpose or any other mission than that for which it acts as a substitute. Thus, since an individual cannot lawfully use force against the person, liberty, or property of another individual, then the common force — for the same reason — cannot lawfully be used to destroy the person, liberty, or property of individuals or groups.”

Bastiat in his essay shows that the law cannot be used to redistribute income from one individual to another. That he argues would be a perversion of the law. The law has to be based on a just and moral set of principles--defending life and property. Any other use of the law is immoral.

As far as gambling is concerned, games of chance are legitimate activities in a free people. The only legitimate role the government should play is to prosecute any fraud that may exist in a casino or any other gambling establishment. In a free society we the people do not need permission from the government to engage in any peaceful, honest activity.

A New Jersey state trooper was arrested for allegedly operating a gambling operation while he was on duty. If that charge is true, he should be fired because he was violating his terms of employment, but he should not be prosecuted because he was a gambling entrepreneur. If the hockey coach was involved in a gambling operation thereby violating the terms of his contract, he too should be fired but not prosecuted.

The laws prohibiting gambling should be repealed or declared unconstitutional because it is a peaceful activity among consenting adults. We are not serfs. We should not need permission from our “masters” in Trenton or DC to live our lives according to our, not their, values.

In the second article, a state appeals court ruled in a unanimous decision that the Twin Rivers Homeowners Association violated the constitutional rights of homeowners. How? The court ruled that the association cannot prevent the posting of lawn signs, limit access to a community room and dictate the contents of the organization’s newsletter.

The court rejected the association’s defense, namely, that a private organization like a homeowners association is not bound by the New Jersey or U.S. constitutions. Residents in a private community are bound by the bylaws of the condo charter. In short, as a private organization, constitutional “rights” do not apply to private property. On private property, rules are set by the owner or owners or by contract, between the tenant or condo owner and the developer and/or manager.

Thus, a condo owner cannot paint his unit any color nor do anything that is prohibited by the bylaws. And if homeowners are not permitted to put lawn signs on their front lawns, that is one of the rules that homeowners knew about before they purchased or rented their units. Additionally, there is a mechanism to amend the bylaws homeowners’ dislike. If the homeowners in a democratic vote do not amend the bylaws to homeowners’ satisfaction, they should move to another development more to their liking.

In 1997 when I was a candidate for governor I put a “Sabrin for Governor” sign on my front lawn. A day or two later I found a note in my mailbox from a police officer notifying me I was violating a town ordinance prohibiting any lawn sign except a “For Sale” one. I called the campaign’s attorney who filed a lawsuit asserting that prohibiting a political sign on my front lawn violated my First Amendment right to free speech. We won. So in 1997 the Sabrin for Governor Campaign struck a blow for free speech in New Jersey.

In my case, my town, a governmental institution, had been violating its citizens’ constitutional rights. Constitutional rights are the public’s protections against government depredations. Thus, a private organization—by definition-- cannot violate its members “constitutional” rights.

In short, we need a legal revolution in America. We need to abolish laws that prohibit the people from engaging in peaceful behavior, even if some or a majority of the public finds that behavior immoral. We need to abolish laws that redistribute income. We need laws that protect the people and their property from egregious takings by all levels of governments. In other words, we need to rediscover—and reignite-- the spirit of ’76.

Murray Sabrin, Ph.D., is professor of finance in the School of Business, Ramapo College of New Jersey, where he is also executive director of the Center for Business and Public Policy, www.ramapo.edu/cbpp.

George W. Bush: Champion of the Welfare-Warfare State

Murray Sabrin

Listening to the State of the Union Message last week was like being transported with Michael J. Fox and the DeLorean in Back to the Future, the 1985 movie about an automobile time machine built by “Doc” played by Christopher Lloyd.

President Bush’s speech was a combination of Woodrow Wilson’s messianic mission to make the world safe for democracy and spread liberty, FDR’s call for domestic statism to save capitalism, and LBJ’s call for more collectivism to build a great society. In short, Bush is giving us the failed polices of past Democrat presidents, and GOP politicians who defend the president and claim to be fiscal conservatives and proponents of limited government are either liars or the most disingenuous bunch of hypocrites in America.

President Bush is expanding the welfare-warfare state in America, unlike any other president in the history of the country. His proposals for more domestic spending on education, healthcare, energy, technology, and other initiatives, was applauded by the Republicrats in Congress, who apparently never reject any domestic spending program as long as it is done by a “conservative” Republican president. Thus, the Democrats get the expansion of the welfare state.

The military hawks in Congress from both political parties are getting their nice little war with more on the drawing board. In short, the end of the Cold War has been replaced with a war against a tactic—terror—that may last at least 20 years, according to Defense Secretary Rumsfeld. In addition, domestic surveillance is reaching authoritarian proportions. No one’s private communications are any longer private. Criticism of Bush’s foreign policies is viewed as bordering on treason.

In short, both political parties are responsible for creating and growing America’s welfare-warfare state, which in the final analysis, will collapse under the weight of the financial burden of having a global military empire and unsustainable domestic entitlement programs—Social Security, Medicare and Medicaid.

George Bush is doing to the GOP what Lyndon Johnson did to the Democrats in the 1960s. In the 966 elections Republicans picked up several dozen seats in the House of Representatives, and in 1968 GOP control of the presidency took root, except for the Carter and Clinton presidencies. The Democrats are in the position to take control of the House in the November elections and win the presidency for years to come because of the neoconservative coup in DC that is leading us down the road to bankruptcy and perpetual war.

For nearly four decades the GOP has had its man in the White House. And how has the country benefited from the GOP controlling the presidency and the Congress since 2001?

Today, the federal government is a freedom lover’s nightmare. It is more powerful than ever, spending more money than ever, with endless budget deficits and a military-industrial complex that outgoing President Eisenhower warned us about in his farewell address in 1961.

Freedom lovers are doing something about the hijacking of America, from a free republic to, dare I say it, a fascist state.

Film producer Aaron Russo has completed a documentary, “America . . .From Freedom To Fascism”. To obtain more information about the movie, see http://www.givemeliberty.org/RTPLawsuit/Update2006-01-30.htm.

Like the patriots of 1776, the patriots of 2006 are taking the message of liberty directly to the people. Thomas Pain’s Common Sense has been credited with sparking the first American Revolution. In the age of the Internet and video, Russo’s latest media project could be the “shot” across the bow of the welfare-warfare state in DC.

Murray Sabrin, Ph.D, is professor of finance at Ramapo College of New Jersey, where he is executive director of the Center for Business and Public Policy, www.ramapo.edu/cbpp.

The Republicrats Have Ruined New Jersey

Murray Sabrin

Governor Corzine’s transition team advisory reports are posted on http://www.nj.gov/governor/home/transition_reports.html. The 19 reports cover suggestions state government should implement to improve agriculture, education, and healthcare, provide more housing, and make transportation more tolerable, among things, and of course, to grow the economy. In other words, despite lip service to capitalism and free enterprise by both Republicans and Democrats in the legislature, state government is involved in more economic activities in New Jersey than some socialist countries around the world.

Free enterprise has been replaced with the mixed economy--part free enterprise, part socialism, and mostly interventionism—the array of mandates, controls, orders, and regulations that government issues to allegedly make life better for the masses. In reality, virally all government programs benefit some special interest at the expense of the general public.

Instead of allowing the people to organize their affairs along voluntary, cooperative principles, state government has co-opted the peaceful relationships of the marketplace. Our state—and nation—has been organized into factions (i.e., special interests) who lobby to get money from their fellow citizens the old fashioned way, by having government plunder the public—primarily upper income individuals and families.

During our country’s history, some business interests have lobbied government for special privileges—tariffs-quotas, etc. -- to undermine foreign competition and have supported regulations and other government policies to stifle their domestic competitors. Usually, government intervention is sold to the public as necessary for the “public interest.”

In addition, as we have seen in New Jersey and around the country, and also in DC, some legislators and bureaucrats line their own pockets with bribes, and gifts while virtually all legislators obtain campaign contributions from scores of special interests

Most legislators—Republicans and Democrats alike-- believe in the welfare state as the means to achieve a “great society.” Otherwise, they would call for the repeal of all the social welfare legislation that has been cemented in the public’s mind as their birthright-- the array of entitlements from healthcare to education to all sorts of benefits that are financially unsustainable. Instead, legislators call for “reform,” which means how can they maintain the welfare state and continue legal plunder--all the direct and hidden taxes that fund Trenton’s voracious appetite for the people’s money-- without causing a political uprising.

In short, we are living under a corrupt regime in Trenton. It does not matter if the governor is a Republican or Democrat, or the legislature is controlled by Democrats or Republicans. In the transition report titled, “Budget and Reengineering Government Transition Policy Group,” the following statement should give pause to all New Jersey’s citizens who think Democrats or Republicans are good stewards of the people’s money.

“In slightly more than a decade, under both Democratic and Republican administrations, the State has gone from an economic powerhouse to a financial basket case…It is important, however, to understand the results of two decades of fiscal overspreading. While the road to decline has often been paved with good intentions, the results are alarming.”

From Tom Kean, Jim Florio, Christie Whitman, Don DiFransesco, Jim McGreevey, and yes, to Dick Codey, governors have spent and borrowed and taxed us to our current position, at the precipice of the financial cliff. Despite the best spinmeisters money can buy for 20 years, the fiscal conservatism of Republicans is a myth of epic portions. As far as the Democrats are concerned, their “compassion” is nothing more than a cleverly designed public relations campaign to justify the redistribution of income that maintains the culture of entitlement and its inevitable consequence—state dependency.

H.L. Mencken’s insights about America’s democracy several decades ago are even more relevant today.

“Democracy is the theory that the common people know what they want, and deserve to get it good and hard.”

“If a politician found he had cannibals among his constituents, he would promise them missionaries for dinner.”

“Every election is a sort of advance auction sale of stolen goods.”

Finally, Founding Father Benjamin Franklin hit the nail on the head more than 200 years ago, which explains why all the transition reports issued by groups comprised of knowledgeable and intelligent individuals will not have the answers to the systemic corruption and comprehensive welfare state in New Jersey: “Any society that would give up a little liberty to gain a little security will deserve neither and lose both.”

When the political elites no longer think they are putative central planners or playing philanthropist with other people’s money, then they will take their rightful place in society, relatively anonymous and irrelevant. Until that glorious day arrives, we will watch the political establishment continue to squander the people’s hard earned money and keep too many individuals and families in a state of dependency.


Murray Sabrin, Ph.D., is professor of finance in the School of Business, Ramapo College of New Jersey, where he is also executive director of the Center for Business and Public Policy, www.ramapo.edu/cbpp.

Corzine's Vision for New Jersey: A Security Blanket for All

Murray Sabrin

Governor Corzine’s inaugural address on January 17th can be summed be succinctly: he is promising the people of New Jersey more collectivism. Throughout Corzine’s speech a dash of the social gospel, a massive dose of social democracy, and a call for social justice along with pro business rhetoric and initiatives were woven together to promise a new security blanket for all the major voting blocs in the state.

Governor Corzine said, “The oath I have just taken to uphold the Constitution of New Jersey is not a ceremony of triumph for one person, or one party, but a solemn covenant to serve ‘impartially and justly’ for everyone. I will be true to that covenant, and to the citizens of New Jersey.” A covenant implies a pact between God and mere mortals. Is Governor Corzine implying that he is doing God’s work in New Jersey?

How does religion play a role in Jon Corzine’s view of the world? Corzine is a Methodist, having attended the same church in Summit as his 2000 United States Senate opponent Bob Franks.

Why is this important? The Social Gospel is an integral component of Methodism. According to Kenneth Woodward, the religion editor of Newsweek, who did an extensive 1994 story about Hillary Clinton (a Methodist): “More than any other Protestants, Methodists, are still imbued with the turn-of-the-century social gospel, which holds that Christians have been commissioned to build the Kingdom of God on earth.”

In other words, (all? most?) Methodist politicians believe the state should be used to create a better life for people on earth. That means high taxes, social welfare spending, extensive regulations, government “investment,” and all the interventionist tools that are at their disposal to provide for the poor, senior citizens, middle class, and the down trodden.

Sprinkled throughout his speech, Governor Corzine made sure that he promised government assistance to every possible constituency in the state: “A just society must offer its hand to the vulnerable. And we must advance the hopes of our great middle class through higher education, affordable housing and decent recreation.”

Governor Corzine also needs the support of the business community to keep the creators of wealth from voting with their feet. He asserted in his address that “with a policy and economic strategy to ‘invest, grow and prosper’ we can and we will overcome our current problems, and meet future challenges.” He also stated that “with a new public-private partnership, focused on economic development, the Edison Innovation Fund, we can renew in this century what happened in the last – when vision, initiative and talent transformed rustbelt New Jersey into powerhouse New Jersey: a global leader in inventions, medicines and the then high-tech industries that gave our citizens the highest median income in the nation.”

The new governor wants to make New Jersey a high tech economy, where innovations, creativity, new products, and higher standards of living for many of the state’s employees. However, in the bygone era of unbridled entrepreneurship, great fortunes were built using private capital to begin and expand the business enterprises that have become household names.

Currently, U.S. corporations have $2 trillion on their balance sheets; trillions of additional capital is available worldwide in private hands. There is no shortage of capital for good business ideas. The state should not try to pick winners in the rough and tumble world of business; that’s the job of entrepreneurs. If, for example, the promise of embryonic stem cell therapy is such a good idea, then venture capitalists should invest in the R&D necessary to bring the procedure to the marketplace.

By calling New Jersey is a “progressive state” with “progressive values,” Governor Corzine proclaimed he will continue to support higher taxes on wealthy and upper middle income families and individuals, while lowering the tax liabilities of low income families. In short, Corzine supports unequivocally the redistribution of income.

At the end of his inaugural address, Governor Corzine quoted George Bernard Shaw: “There are those who look at things the way they are and ask, ‘why’?…. I dream of things that never were and ask ‘why not’?” Apparently, the governor needs to justify his collectivist agenda by quoting from a literary figure. Governor Corzine instead should have quoted from Frederic Bastiat, who wrote in The Law:

“Self-preservation and self-development are common aspirations among all people. And if everyone enjoyed the unrestricted use of his faculties and the free disposition of the fruits of his labor, social progress would be ceaseless, uninterrupted, and unfailing.”

In short, limited government and private charity—not collectivism--would achieve Governor Corzine’s objectives: prosperity, humanitarian aid, and integrity in government.

Murray Sabrin, Ph.D., is professor of finance in the School of Business, Ramapo College of New Jersey, where he is also executive director of the Center for Business and Public Policy, www.ramapo.edu/cbpp.

Smoking, Foul Balls and the Law

Murray Sabrin

Last Monday the legislature passed (surprise!) a smoking ban in bars and restaurants. Bar and restaurant owners as well as go-go dancers criticized the bill before its passing, because they claimed their businesses or income may be threatened by the smoking ban. Their protests fell on deaf ears in the legislature.

The do-gooders on both sides of the political aisle overwhelming passed the bill that allegedly will protect the public’s health from secondhand smoke. A major rationale for the ban on smoking in these establishments is that patrons need the long arm of the law to make sure that their lungs are not invaded by someone else’s smoking. As I pointed out last week, the science of second hand smoke is dubious. There are reputable scientists who have concluded that the negative effects of secondhand smoke are negligible.

There is one sure way to reduce the alleged negative effects of secondhand smoke: don’t patronize bars and restaurants where smoking is allowed. If people believe their health is endangered by having their favorite brew in the local bar or having a dinner in a restaurant where smoking is allowed, they should patronize smoke free establishments, or drink and eat at home.

To satisfy the demands of smoking and nonsmoking customers (that is, the market) owners of bars and taverns could post signs or be ordered to post signs by the municipality or state if they allowed smoking on their property. Individuals would then have the option of patronizing a smoking allowed or smoke free private business.

In other words, if bars and restaurants would post such signs, customers would then be able to make an informed decision about the “risks” of patronizing a possibly “hazardous” business.

But the public’s health can not be compromised, the do-gooders would argue. Signs are not enough. We need a ban on smoking in bars and restaurants. We cannot allow people to risk their health in smoke filled bars and restaurants .

Well, last Monday the legislature did ‘compromise” the public’s health when it passed the New Jersey Baseball Spectator Safety Act of 2006. The bill protects owners of minor league ballpark owners from being sued by spectators who are hit by a foul ball. According to one of the bill’s sponsors, “Team owners should not be held liable for patrons’ lack of awareness of their surroundings.” In addition, he said, “There are risks associated with attending sporting events and occasionally people do get hurt.”

In other words, baseball spectators are on notice: you take the risk when you attend a baseball game. Don’t think of suing, because the bill requires stadiums to post signs warning fans that they may be hit by a ball or flying bat.

So last Monday the legislature violated the rights of property owners by passing a smoking ban in bars and restaurants while immunizing stadium owners from the risks associated with attending a baseball game.

If the legislature believes that patrons must accept the risk of possibly getting injured or killed when they attend a baseball game, shouldn’t individuals also have the right to determine if the risks of patronizing smoke filled bars and restaurants are worth it?

Once again, the legislature last week demonstrated that it does not embrace the rule of law, that it does not protect property rights, nor does it deserve our respect, for it is taking us further down the collectivist road.

Murray Sabrin, Ph.D., is professor of finance in the School of Business, Ramapo College of New Jersey, where he is also executive director of the Center for Business and Public Policy, www.ramapo.edu/cbpp

Ban the Smoking Ban

Murray Sabrin

The New Jersey Assembly is scheduled to vote on an indoor smoking ban today. The ban would prohibit smoking in all public places except casinos and other facilities, such as smoking rooms. The Senate already passed the smoking ban bill, so if the Assembly votes yea today, Acting Governor Codey, a long-time proponent of the bill, said he would sign it immediately, providing him with a “legacy” piece of legislation.

A law to ban smoking in privately owned establishments is symptomatic of the prevailing political ideology in America today--command and control, or more commonly known as statism.

Ostensibly, a ban on smoking in bars, restaurants, bowling alleys, and other establishments is needed to protect the public’s health. Second hand smoke is alleged to be one of the contributing factors in the premature deaths of nonsmokers, who also face more major illnesses, because they are exposed to unwanted smoke.

However, according to a 2004 essay by the Heartland Institute (www.heartland.org), a Chicago- based think tank:

The latest word on second-smoke appeared in the May 12, 2003 issue of the British Medical Journal. Two epidemiologists, James Enstrom at UCLA and Geoffrey Kabat at the State University of New York at Stony Brook, analyzed data collected by the American Cancer Society from more than 100,000 Californians from 1959 through 1997.

“The results do not support a causal relation between environmental tobacco smoke and tobacco related mortality,” the researchers wrote, although they do not rule out a small effect. “The association between tobacco smoke and coronary heart disease and lung cancer may be considerably weaker than generally believed.”

“It is generally considered that exposure to environmental tobacco smoke is roughly equivalent to smoking one cigarette per day,” according to Enstrom and Kabat. “If so, a small increase in lung cancer is possible, but the commonly reported 30 percent increase in heart disease risk--the purported cause of almost all the deaths attributed to secondhand smoke--is highly implausible.”Yet, there are experts who assert just the opposite is true, namely, that hundreds of thousands of Americans are dying each year from second hand smoke, and that millions more are suffering needlessly because of indoor smoking."

Who should we laymen believe? The truth is, it doesn’t matter whose “science” is right. What matters is quite simple: Does a smoking ban violate the rights of property owners?

Smoking tobacco is legal, having a long tradition in America going back to colonial days. The negative effects of smoking have been known for years. Nevertheless, America was founded on the principles of individual rights, limited government and free enterprise. Thus, the only legitimate ban on smoking is if a property owner bans patrons from lighting up in his establishment.

There is no “right” to enjoy smoke free air on someone else’s property. An individual only has the right to enjoy smoke free air in his home, and business owners have the right to ban or allow smoking in the workplace or allow it in a designated area. This approach is consistent with our nation’s principles, which sadly have been thrown in the dustbin of history by the command and control fanatics in government and the “do-gooders” who want to prohibit anything that they personally disapprove of.

If we accept the principle that second hand smoke can be banned by the state in privately owned establishments, then why not ban indoor smoking in private homes, where it could be doing incalculable harm to newborns, infants, teenagers, the disabled, asthmatics, the elderly and others who live in a household where someone smokes? That is the inescapable logic of the smoking ban. Why don’t the “public health” advocates call for an indoor smoking ban in all private residences and include casinos and other exempt facilities in the smoking ban if second hand smoke is such a health hazard?

The statists in Trenton have no respect for property rights, embrace government with all their mind and soul, and in the final analysis are no different than the commissars that ruled the Soviet Union for decades. The Trenton political elite are the vanguard of the command and control extremists who want to ban, mandate, and regulate all human commercial and business activities.

The smoking ban will pass today, unless members of the Assembly have an epiphany--a highly dubious occurrence given their previous support for more and more statism. When Governor Codey signs the indoor smoking legislation in a few days, there will be happy and proud faces at the ceremony celebrating the indoor smoking ban. Is it because legislators did something to “protect” the public’s health? Or, will they be smiling because they were successful once again in reducing the people’s property rights moving us closer to a collectivist society?

Murray Sabrin, Ph.D., is professor of finance in the School of Business, Ramapo College of New Jersey, where he is also executive director of the Center for Business and Public Policy, www.ramapo.edu/cbpp

New Year’s Wishes

Murray Sabrin


The beginning of a new year is a time for reflection. Some people resolve to get more exercise, quit smoking, reduce their alcohol consumption, start a diet, rein in their spending, or do something to improve their lives. All worthy goals, to be sure.

Nevertheless, human nature being what it is, many people do not achieve their New Year’s resolutions. However, self –discipline and external motivation usually works quite well to spur us on. So whatever you resolve for 2006 stick to it. Your actions are an investment in yourself. Nobody has more of an interest in your success than yourself. Waiting for others to help you succeed is wishful thinking.

In the public arena, there still are too many people waiting for the government to assist them, nurture them and their families and their communities, create programs for them, and in short, to better their lives. And politicians from both sides of the aisle are more than happy to tax and spend and regulate to perpetuate and expand the welfare state.

As we enter 2006 and approach the 75th anniversary of FDR’s New Deal (1933), the welfare state is expanding faster than the ability of the economy to pay for it. Hence, the huge federal budget deficits. Something has got to give. (A topic I’ll explore in the future column.)

In the meantime, here in New Jersey, the welfare state has been embraced by the power structure from the governor the legislator, the Supreme Court, to most academics, urban families, many media pundits, and sadly, most suburbanites. That’s why Democrats keep winning in New Jersey. The Democrats keep promising “bread and circuses” and a majority of voters keep electing Democrats and big government Republicans.

Suburban voters, who hold the balance of power on Election Day, are responsible for electing pro welfare state candidates.. Yet, they keep on voting for candidates who govern against their economic self interests. Why? Two reasons. There are suburban voters who support the welfare state more than their economic self interest. And, the other is the fear factor. Let the state pour money into the cities so there won’t be a repeat of the 1967 Newark riots.

People generally learn from history, especially when past events have had such a traumatic impact on their collective psyche. In fact, according to a knowledgeable source, urban residents threatened demonstrations in Trenton if funding were cut back in the early 1990s. The money kept on flowing to Newark, Paterson, Jersey City, and Camden. In short, political extortion works.

So for 2006 I have the following wishes. Given the reality of the political class in Trenton and Washington and their apologists around the state, the following is more of a fantasy than wishes.

I wish Acting Governor Codey’s 14 month tenure would not be praised by pundits and editorial writers. He is leaving incoming Governor Corzine with a projected $6 billion budget for next year. If Codey’s leadership is to be commended, then a projected $10 billion budget deficit would be absolutely outstanding.

I wish Governor Jon Corzine embraces the idea that higher incomes and wealth comes from production not redistribution, and that the nonprofit sector is more effective than the welfare state for low income and the elderly.

I wish our congressional delegation works nonstop to end the Iraqi work ASAP and keep a tight rein on presidential power. Our civil liberties are in jeopardy and we need our representatives to step up to the plate and protect our constitutional rights. They should also work to abolish the Alternative Minimum Tax—one of the worst pieces of legislation in the history of the country. New Jerseyans are particularly hard hit because of high property taxes and the state income tax. A nation should have one tax code.

Democrats should stop calling themselves “pro-business” while they raise taxes and pass more mandates on corporations and mom and pop enterprises.

Republicans should realize that the urban vote is solidly Democratic. The Democrats are the party of the tax consumer. The GOP should be the party of the taxpayer. If GOP candidates cannot make that differentiation, they will continue to lose elections, and not regain control of the legislature. There should be enough taxpayers to elect Republicans to the state legislature. They only way will know, if the GOP nominates uncompromising pro-taxpayer candidates for governor and the state legislature in upcoming elections.

What are the chances that my 2006 wishes will come true? Slim to none. The political class will not change its stripes. They are hopelessly addicted to the public’s money.


Murray Sabrin, Ph.D., is professor of finance in the School of Business, Ramapo College of New Jersey, where he is also executive director of the Center for Business and Public Policy, www.ramapo.edu/cbpp

The Gas Tax Should Increase and Other Taxes Should be Cut

Murray Sabrin


Sabrin calling for a tax hike. Has the author of Tax Free 2000, a blueprint for a tax free society, lost his marbles? Has he sold out? What’s going on here?

Let’s do a reality check.

Too many state and local roads have potholes, bridges are crumbling and the Transportation Trust Fund is about to run out of money, because bonds were issued years ago to repair the state’s roads, and now virtually all the gas tax revenue has to be used to pay off the bonds. Welcome to New Jersey.

The government has a virtual monopoly on roads and highways and a steady stream of funds to build and maintain roads and bridges. The state gas tax and federal highway funds—funded by you and me every time we fill up at the pump--flow into Trenton. We should expect the state transportation experts to maintain the roads and highways to insure a smooth flow of people and goods within New Jersey.

The state government “owns” and maintain the roads and streets. That’s how our society has evolved. We the people should expect that the government to do at least one thing right, even though the private sector could do a much better job than the bureaucrats in Trenton of providing and maintaining the roads. Private enterprise is building roads throughout the world and in the United States, by the way.

In the meantime, we have to deal with the reality of New Jersey’s highways and bridges.

Gas taxes are going up. Governor Corzine (even though he hasn’t taken office yet I will refer to the next guv by his title) wants to increase the gas tax. Democrats we hear are nervous about voting for a gas tax. They should be. They raised every conceivable tax, and the money has been squandered, wasted, stolen, etc., under their “leadership.”

Governor Corzine should propose a 20 cent a gallon tax hike to replenish the trust fund and get the roads and bridges repaired. He should explain to the people of New Jersey that this will cost an extra $80-$200 per year in higher gas taxes per vehicle in the state.

Let’s do the arithmetic. If you drive 12,000 miles per year and your vehicle gets 20mpg, you use 600 gallons of gasoline per annum. A 20 cent gas tax hike will cost you an additional $120 per year. If your vehicle gets 30 mpg, the gas tax hike will set you back $80 per year. If you drive more miles annually, you can easily calculate the additional gas tax—which is really a user fee and the least objectionable tax we have because we get a tangible benefit, roads to take us where we want to go in relative comfort.

For Governor Corzine to get this passed easily, he should reduce the sales tax by one percent to 5%. This would save families from $50 to several hundreds of dollars per year, depending on their income and spending on taxable items. Because of previous incompetence, misfeasance and possible corruption, the people should pay less sales taxes in order to replenish the Transportation Trust Fund.

The state’s 6% sales tax brings in about $6 billion per year. A 5% sales tax would thus bring in $5 billion to the state treasury, all else being equal, requiring a one billion dollar reduction is state spending so the budget would not have a one billion imbalance between spending and revenue. A good idea if there ever was one. However, New Jersey retailers should get a sizeable boost from a sales tax reduction to 5%. The sales of high ticket items—automobiles, jewelry, high end electronics, computers, etc., would rise and the additional sales tax revenue would make up for some of the revenue loss that would result from a 5% sales tax.

In addition, a sales tax is considered “regressive”, because it takes a bigger chunk out of low income families’ budgets. Thus, Democrats should support a lower sales tax, because after all they are the self proclaimed champions of the “little guy.”

(Moreover, all of McGreevey’s tax hikes should be abolished as well. But that’s for another column.)

This is not a “supply side” tax proposal to boost tax revenue with a tax cut so the state can keep on spending and spending. On the contrary, a gas tax hike to help pay for the roads and bridges would upgrade the state’s infrastructure so businesses can prosper, jobs can be maintained and created, tourism can flourish, and we could continue to travel to and from work easily and drive around the state without interminable delays and hassle.

If Jon Corzine really wants to be a great governor, he needs to cut spending, reduce taxes, eliminate ridiculous regulations and mandates, and end the waste and corruption that is so pervasive in New Jersey. If he does, he will deserve reelection. If Corzine governs as another tax, and spend, borrow and regulate politician, the state’s economy will be in deep trouble sooner than he thinks—and his political career will be over.


Murray Sabrin, Ph.D., is professor of finance in the School of Business, Ramapo College of New Jersey, where he is also executive director of the Center for Business and Public Policy, www.ramapo.edu/cbpp

Jon Corzine’s Inherent Contradiction

Murray Sabrin


Last week Governor-elect Corzine addressed the annual public policy forum of the New Jersey Business and Industry Association in Woodbridge. During his remarks he stated: “I am a capitalist. I believe in business. I really want to work with you… [and] I am progressively liberal. It doesn’t mean I’m foolishly liberal.” He also said, “The business climate needs to change…I don’t consider business the problem. I consider it the solution.” On employment in New Jersey, Corzine said he wants “to grow the private sector job element in this State.”

I met Jon Corzine for the first time (Labor Day, 1999) when we were both campaigning for our respective party’s U.S. Senate nomination. He told me, “I am in favor of a regulated capitalism.” In the governor’s office, his policies will reflect that view in the next four years--unless, of course, Corzine surprises us beginning next January and begins reducing the size and scope of government.

Despite all his credentials, rising up the ranks in Goldman Sachs to become its chairman and a net worth in the hundreds of millions of dollars, Jon Corzine is an interventionist and not a proponent of laissez faire economics—the one and only true capitalism. He does not believe that businesses can be left alone to purse profits and provide quality goods and services without the heavy hand of government “managing” the economy.

The following insights from economist Ludwig von Mises, the foremost proponent of laissez faire economics in the 20th century, reveal how Corzinenomcis is nothing more than discredited shibboleths.

“If one rejects laissez faire on account of man’s fallibility and moral weakness, one must for the same reason also reject every kind of government action.”

In New Jersey, the moral weakness of politicians and bureaucrats is legendary. Yet, Corzine wants to achieve the impossible, ethical big government. He also believes that the less fortunate in society are entitled to government assistance, not realizing that the ends do not justify the means. Taxation—legal plunder—is not a moral means to transfer income to individuals who are not financially independent. Real charity comes from the social sector, the network of nonprofit organizations whose mission is to assist the homeless, illiterate, uninsured and others who cannot make ends meet in our society.

“Interventionism cannot be considered as an economic system destined to stay. It is a method for the transformation of capitalism into socialism by a series of successive steps.”

New Jersey governors and legislators of both parties have increased government spending, poured money into the Abbott (urban) school districts in one of the most massive redistribution of wealth schemes in the nation’s history, supported the egregious school construction program, continued the progressive income tax, maintained extensive regulations on businesses, all of which were supposed to achieve a better economy, less poverty, higher paying jobs and an educated populace. After decades of social engineering, the welfare state has not taken delivered us to the Promised Land.

After each government failure, according to the political class and their allies in the media and apologists in academe, the solution is not downsizing government but upsizing government.

“Laissez faire, laissez passer does not mean: let the evils last. On the contrary, it means: do not interfere with the operation of the market because such interference must necessarily restrict output and make people poorer.”

If Governor-elect Corzine wants to help the people who are on the bottom of the economic ladder, he should do everything in his power during the next four years to unleash the productivity of the private sector, which he claims is the “solution” to a better New Jersey. He should do everything he can to change the anti-business climate in New Jersey, a Herculean task given the ideological posture of the Trenton political elite.

“What is called economic progress is the joint effect of the activities of the three progressive groups . . . the savers, the scientist-inventors, and the entrepreneurs, operating in a market economy.”

In short, politicians do not contribute to the progress of society. The less power the government has the more progress there will be in society. As a former top honcho on Wall Street Corzine should know that private capital creates wealth and jobs. Government only redistributes income and wealth, and, in the final analysis, destroys jobs.

In a recent talk to congressional staffers in Washington DC, Lew Rockwell, founder and president of the Ludwig von Mises Institute said:

“Free markets are not just about generating profits, productivity, and efficiency. They aren't just about spurring innovation and competition. They are about the right of individuals to make autonomous choices and contracts, to pursue lives that fulfill their dreams even if these dreams are not approved by their government masters.”

When it comes to the issue of abortion, Jon Corzine is probably the most passionate pro-choice politician in America. If he were to harness some of that passion about “choice” in creating a free economy in New Jersey, then the income and wealth of all New Jerseyans would rise, but only if he embraces capitalism---lower taxes, less government spending, abolishing onerous business regulations and creating a pro free enterprise climate. In short, the state’s economy would prosper beginning next year if Governor Corzine would begin dismantling the anti-capitalistic policies he has embraced in the past and rid himself of his inherent contradiction—being a pro interventionist capitalist.

Murray Sabrin, Ph.D., is professor of finance in the School of Business, Ramapo College of New Jersey, where he is also executive director of the Center for Business and Public Policy, www.ramapo.edu/cbpp.

Bob Menendez: Cuban-American Hero or Cuban-
American Castroite?

Murray Sabrin

Governor-elect Corzine’s appointment of Congressman Robert Menendez to fill the remaining year of his U.S. Senate term was no surprise. Corzine had been signaling the Menendez appointment since he jumped into the governor’s race a year ago.

In all the press reports about the life and career of Bob Menendez, he is always identified as the son of Cuban immigrants. The implication is that Menendez’s parents fled Castro-ruled Cuba. In yesterday’s Record columnist Mike Kelly writes, “As the son of Cuban –American parents, who fled the brutal hand of Fidel Castro…” stating in no uncertain terms that Menendez’s parents arrived in America to escape Castro’s brutal totalitarian regime. (Emphasis added)

In his address accepting governor-elect Corzine’s appointment to the U.S. Senate, Menendez said, “My own parents came to this country fleeing tyranny and searching for freedom.” Again, Menendez implied his parents fled Cuba because of Castro’s oppressive policies. And journalists have been inferring that the Menendez family escaped the Castro regime.

There is one major problem with the newspaper reports about Menendez’s parents’ migration from Cuba, and Mike Kelly’s column. Bob Menendez was born in New York on January 1, 1954, exactly five years before Castro seized power on January 1, 1959. Menendez’s parents arrived in America well before Castro ousted the dictatorial Batista regime. In other words, the Menendez family did not leave Cuba because of Castro. Why did they leave Cuba? Were Mr. and Mrs. Menendez brutalized by Batista—the Cuban dictator of the early 1950s? If so, how were they able to leave Cuba?

Numerous questions remain unanswered about the Menendez’s family migration to America. Will the congressman set the record straight?

The Menendez family apparently left Cuba to seek better opportunities in America, and so did millions of families from the Caribbean, Europe, Asia and other parts of the world in the post World War II period. The Menendez family’s journey to America is not terribly remarkable. So why does the congressman and the media bring it up all the time?

The Bob Menendez story is political mythology at its worst. Son of oppressed parents who fled Castro’s Cuba (myth) navigates the jungle of Hudson County politics to become a United States Senator, achieving the “American Dream.” Is being appointed to the United States by one of the most left-wing public officials in America a badge of honor, and being a political boss of one of the most corrupt counties in the country achieving the American Dream? Apparently so.

In Hudson County where politicians ostensibly go to prison more often than they go to church, Bob Menendez has survived unscathed for three decades while numerous pols in his legislative district have ended up in prison garb.

Will Menendez get a primary challenge? If Menendez’s possible challengers, Congressmen Andrews and Pallone, cannot be persuaded by Jon Corzine to stay out of the race, then the political opposition researchers may have a field day investigating Bob Menendez’s career in Hudson County.

Politically, Bob Menendez is a collectivist, an unapologetic defender of the welfare state, opponent of tax cuts and the Second Amendment, an unabashed proponent of abortion, a supporter of affirmative action, a passionate defender of the Cuban embargo and an opponent of the Iraq war. In short, he is right on only one issue--the war. Menendez voted against giving President Bush authority to invade Iraq. I would have done the same. Thus, on one of the most important issues facing America he voted to limit presidential war making powers. For that I salute him.

Although Bob Menendez took the courageous position on the Iraq war, he nevertheless supports the iron fist of the federal government in virtually all other areas of life in America. His support of the 40 year old American trade embargo with Cuba is despicable. The victims of the embargo are the Cuban people—the people he claims he loves--and American farmers and businesses that want to sell their products to the Caribbean island. In short, Menendez has played the anti-Castro card in his rise to power as well as any American politician.

The Cuban embargo has been a total failure. Castro has been in office since 1959 despite the chokehold the American government has put on the Cuban economy and its people. Nevertheless, Menendez along with politicians on both sides of the aisle in the Congress have continued to support the most despotic foreign policy of the past half century. His “compassion” for the poor Cuban people is certainly suspect.

In the final analysis, Bob Menendez could have been a Cuban-American hero if he would believe in freedom and liberty. The backdrop of Governor-elect Corzine’s announcement that he was appointing Bob Menendez to the United States in the shadow of the Statue of Liberty is a travesty. Instead of supporting limited government at home and abroad--the Cuban embargo is in many ways an act of war—Bob Menendez is an anti-Castro Castroite. He believes in the brutality of the welfare state—the redistribution of income--and an aggressive policy toward a neighboring country, Cuba, that is not a threat to the United States. That’s why his appointment to the United States Senate by Jon Corzine is such a disappointment.

Murray Sabrin, Ph.D., is professor of finance in the School of Business, Ramapo College of New Jersey, where he is also executive director of the Center for Business and Public Policy, www.ramapo.edu/cbpp.

The Income Tax: Still a Tool of Plunder

Murray Sabrin

The New Jersey state income tax will be 30 years old in 2006, and the hosannas are starting to appear in the press. In yesterday’s Star-Ledger, Jon Shure, president of New Jersey Policy Perspective, a “progressive” think tank, sings the praises of former Governor Brendan Byrne’s gift to Garden State, the income tax.

When the New Jersey income tax was introduced there were two rates, 2 percent and 2.5 percent on incomes above $20,000. Currently, the top rate is 8.97 percent on income above $500,000---Jim McGreevey’s “millionaire tax,” which was relentlessly advocated by Shure and others a couple of years ago to fill the state coffer to close the state budget deficit.

So the “modest” state income tax of 2.5 percent on incomes above $20,000 has now climbed almost four fold to nearly 9 percent. In short, once the government gets its clutches on the people’s money, rates invariably climb for virtually all taxpayers.

That’s the lesson of public finance. Once a tax is introduced it almost always increases. The federal income tax, for example, exempted 98 percent of the population when it was instituted in 1914, and the highest marginal tax rate was 7 percent. By the end of 1917, the highest marginal rate climbed to more than 70 percent and most income earners were paying a federal income tax.

In other words, the federal income tax initially funded America’s entry into World War I, and then was used to help create the welfare state in the 1930s. The income tax has been an indispensable tool to plunder Americans to finance the welfare-warfare state for more than 90 years. Without the ability to tax the American people directly, the federal government could not have grown as rapidly as it did for nearly 100 years.

But I digress; back to New Jersey. Jon Shure’s defense of the income tax fails miserably, and his call for it to be hiked ignores major economic, financial and philosophical objections to the progressive income tax.

Although Shure is not an economist by training, he should have taken the time to do so homework about the economics of taxation. He then would have learned that raising taxes does have negative effects on employment, output and eventually brings in less government revenue than the proponents of high tax rates hope for. All taxes create disincentives. The evidence is abundant. As tax rates increase, people tend to work less, produce less and avoid taxes (which is legal) or evade taxes (which is illegal), to protest what they perceive to be government confiscation.

People react differently to government policies. The most tax sensitive individuals will do all they can to reduce their tax liability, while the folks who are happy to pay higher taxes will not complain, because they think the government is doing God’s work on earth in addressing the needs of the “poor” and middle income families.

The evidence is compelling. Higher tax rates reduce tax receipts. (Not that we want to see tax revenue increase.) This was known as far back as ancient Egypt, when the tax collectors realized that high tax rates reduced the amount of revenue flowing into the treasury. Yet for thousands of years, big government types have wanted to raise rates in country after country in the mistaken belief that would cause the treasury to bulge with tax dollars.

In another vein, Shure makes the egregious statement that the income tax is “fair” because it is based on the ability to pay. Who says so? Why should individuals be taxed on the “ability to pay?” Shure offers no defense of his assertion. Goods and services in the economic marketplace are based on the law of one price. All goods tend to have one price for all consumers, no matter what their income is. Could you imagine going to the supermarket or the mall and the goods your purchase would be based on your annual income? You would be outraged. Yet, the income tax, one of Karl Marx’s ten planks that he believed would eventually create a communist society, is supported by politicians across the political spectrum.

In short, ideas matter. And bad ideas matter a lot.

As far as government services are concerned, privatization and nonprofitization would provide better and lower priced services to the public than government. In other words, a limited government society would be more prosperous and freer than the status quo of high taxes, profligate spending and burdensome regulations.

Lastly, proponents of the income tax fail to address the most powerful critique of the income tax and of taxation in general. As Frank Chodorov, author of The Income Tax: Root of All Evil, wrote: “There cannot be a good tax nor a just one; every tax rests its case on compulsion.”

That’s the debate that Jon Shure and other advocates of taxation do not want to engage in. Why should government be allowed to engage in plunder? Private citizens cannot use compulsion, coercion or violence against their fellow citizens. A just government must adhere to these same principles.

Let the debate again: Liberty and freedom versus coercion and compulsion.


Murray Sabrin, Ph.D., is professor of finance in the School of Business, Ramapo College of New Jersey, where he is also executive director of the Center for Business and Public Policy, www.ramapo.edu/cbpp.

Is Legal Plunder About to Explode Under Corzine?

Murray Sabrin

If you were one of the brave souls to participate in “black” Friday’s shopping frenzy, you had the opportunity to express your consumer preferences. Your preferences in turn are in fact society’s direct democracy—the marketplace. Every purchase you make is a vote cast on behalf of both a retailer and the manufacturers of goods. The more “votes” (dollars) they receive, the more successful they will become.

In the economic marketplace, both buyers and sellers engage in voluntary exchange to achieve their objectives. The consumer wants to obtain satisfaction, and the seller wants to obtain revenue to pay his expenses and hopefully generate a profit.

In the economic marketplace, in short, every market participant must not engage in plunder, i.e., a coercive act against his fellow human beings. Otherwise, he would be committing fraud or plundering his fellow citizens.

Contrast the economic marketplace with the political marketplace. In the political marketplace, legal plunder, is the hallmark of virtually all “transactions.” Taxes, regulations, mandates, profligate spending, and onerous debt, all in the name of creating a “great society” is supposed to lift the poor, provide security for the middle class while taxing (plundering) all income groups but primarily upper income individuals and families to pay for the welfare state. The main culprit is the “progressive” income tax that taxes higher incomes at greater rates.

In fact, there is substantial evidence that the welfare state plunders everybody, except for the political class and their well connected allies in the private sector. More about this in future columns.

In the meantime, as reported in the Star-Ledger yesterday (November 27), 11 of the Abbott districts are requesting another $6.5 billion to complete the construction of new schools on top of the $2.55 billion they have already spent. Other Abbott school districts requests could lift the total request to $14 billion on top of the already $6 billion spent in the first round of school construction.

The failure of the School Construction Corporation to complete its assigned task in the Abbott school district with the original $6 billion reveals the utter and complete incompetence, corruption, misfeasance and malfeasance of state government bureaucrats.

We do not need a lengthy analysis of the way government functions. Government is the least competent institution in society. The private sector provides us with goods and services we want, and the nonprofit sector does a better job than government in helping people who are in need. Remember the incompetence of FEMA, while companies and nonprofits did a superb job of getting supplies and assistance to the victims of Hurricane Katrina.

In the Garden State, the urban school districts are expensive, bloated bureaucracies which do not improve the performance of its students as more and more money is thrown at them.

Governor-elect Corzine will be faced with a major choice when he takes office on January 17, 2006. Will he continue the urban school construction program? This would mean more debt for the state and higher interest and principal payments for years to come? Or will he challenge the Supreme Court’s ruling that the state’s “poorest” districts need to be bailed out by state taxpayers?

The way governor-elect Corzine responds to the urban school construction debacle will speak volumes about how he will govern. The people of New Jersey need straight answers from the incoming Corzine administration about the alleged fraud and misappropriations in the School Construction Corporation. In addition, we need a debate once-and-for-all about the role of government in education. Otherwise, legal plunder will accelerate under a Corzine regime as he tries to save the failing urban public schools from imploding.

Murray Sabrin, Ph.D., is professor of finance in the School of Business, Ramapo College of New Jersey, where he is also executive director of the Center for Business and Public Policy, www.ramapo.edu/cbpp.

Giving Thanks...One Day at a Time

Giving Thanks…One Day at a Time

Murray Sabrin

We have much to be thankful for living in New Jersey, despite the best efforts of the political class in Trenton to make the Garden State as inhospitable as possible.

With all the ills facing hundreds of millions of human beings around the world, we live in relative safety and comfort. In the past year a tsunami, earthquakes, hurricanes, floods, fires, tornadoes, and bombings in and outside of Iraq have killed hundreds of thousand of fellow human beings around the world. In other words, life is very precarious in many parts of the planets because of Mother Nature and the violence perpetrated by governments and criminals. (Isn’t that redundant?)

In the Garden State, however, the Trenton political elite do not intend to make life more difficult than it has to be, but the tax-and-spend-and borrow and regulate mindset of past governors and a majority of legislators is taking its toll. New Jersey’s reputation as a corrupt, out of control spending, high tax, regulate everything state is not attracting many high paying jobs, and tens of thousands jobs may vanish in the next few years as employers leave for more business friendly communities throughout the country.

Nevertheless, we still have the freedom to choose where we live and where we want to work. And business executive and small business owners also have the right to choose where to locate their enterprises. That’s why the free enterprise system and our political structure, where states—the laboratories of democracy—are engaging in a healthy competition to attract businesses, is still making it possible for entrepreneurship to thrive in America.

And most importantly, we have the right to speak out and criticize the status quo without the fear of being arrested and jailed…for the time being. Freedom is hanging by a precious thread in America. It is up to everyone across the political spectrum to support the First Amendment and the other nine that comprise the Bill of Rights without reservation.

As long as the federal government does not get out of control—imposing import and export controls, imposing windfall profits taxes, boosting spending to the stratosphere, and ratcheting up the regulatory machine--we will muddle through unless the Federal Reserve cranks up the printing presses in the next few years to “stimulate” the economy. Then all bets are off. The dollar will go into a free fall and economic chaos will ensue.

In the meantime, we have to be uncompromising defenders of liberty and free enterprise—the two essential ingredients of a just and prosperous society. We have to engage the proponents of statism---the supporters of entitlement and redistribution. We have them to challenge them to defend the moral foundation of the welfare state. In other words, we have to take the high road.

As we approach Thanksgiving Day, last year on www.lewrockwell.com Anthony Gregory captured the essence of the holiday:

We owe thanks to the market – to the millions of men and women, Americans and foreigners, employers and employees, managers and workers – for our Thanksgiving dinners, and for almost all else of material worth in our lives. The market, along with our families, friends, and communities, embodies the civil, peaceful and cooperative spirit to which we owe thanks for all productive and harmonious human activity – in other words, for civilization itself.

Amen.

Murray Sabrin, Ph.D., is professor of finance in the School of Business, Ramapo College of New Jersey, where he is also executive director of the Center for Business and Public Policy, www.ramapo.edu/cbpp.

The Corzine Agenda: Good for New Jeresyans?

The Corzine Agenda: Good for New Jeresyans?
By MURRAY SABRIN
JerseyPolitics.com.com Columnist

In his victory statement Tuesday night, governor-elect Corzine reiterated a number of goals he wants to accomplish in his first term. Let’s look at the major initiatives he wants to pursue.

One of Corzine’s first priorities is property tax relief/reform. During the campaign he promised a 40% increase in property tax rebates over four years to seniors and middle-income families as well as rebates for renters. Tax relief for upper middle and upper income families and individuals are not on the governor-elect’s agenda. Why?

Corzine is a proponent of “progressive” taxation. He unequivocally supports the progressive income tax system. And his property tax plan, in the final analysis, is to create a very steep property tax system. That is, very low taxes for seniors, some of whom are wealthy in their own right, and low and middle income homeowners, and high property taxes for families earning more than $200,000 annually.

Under Corzine’s plan seniors and families earning less than $200,000 per year would get increased property tax rebates. In other words, “rich” families as defined by governor-elect Corzine would end up paying an even greater share of property taxes under his plan. In New Jersey, two-income families earning more than $200,000 do not consider themselves rich, especially if they have one of two children in college, a mortgage, several automobiles, and pay state income and local property taxes.

Yet, governor-elect Corzine excludes them from getting a property tax rebate. Why?

During the gubernatorial debates Corzine said he believes taxes should be based on the “ability to pay.” Why? He never gave a detailed philosophical answer. He merely asserted that, knowing he would not lose many votes, because less than 10% of the electorate falls into that income category. Remarkably, there are families who earn high six-figure incomes or more who believe they should pay more because they too support the welfare state. How else can we explain the fact that Corzine outpolled Forrester in high income towns like Tenafly in Bergen County?

If people want to support a welfare system, they should pay for it voluntarily. That is compassionate. Forcing people to pay, year after year, for a massive redistribution of income is wrong. Period.

The first responsibility of every adult is to be financially independent. If adults cannot support themselves, then their families are morally obligated to help them. Next, the community’s social service agencies, the nonprofits, should do all they can to get individuals on their feet and help pay for the basic necessities of life.

Government does not have a moral claim to the income and wealth of its citizens. To assert it does, makes the government no different than a common thief.

Corzine apparently believes that he and others who have substantial wealth and income should “give back” to society in the form of higher taxes. But tax and spend is not how people should “give back.” People can give back by establishing a foundation, which Corzine did, or making generous contributions to nonprofit institutions, which Corzine has and does.

So why does government have to get involved in helping the needy? The ghost of the Great Depression haunts the political elite, the intellectual class, and editorial writers. They all believe that if another great depression occurs, the government would have a wide and deep “safety net” in place to meet the needs of the people in case of a national economic trauma. In addition, they believe government should be “compassionate,” and the welfare state is our collective response to the needs of the “underclass” and senior citizens.

Good government—another of Corzine’s goals-- has to be limited government, because big government is corrupting and the corrupt love big government. In New Jersey, that means getting jobs for cronies and contracts for contributors, all in the name, of course, of serving the public. To his credit, Corzine passionately stated he will end corruption in Trenton and around the state. He said he wants to be held accountable. In four years he will be if he can not make a dent in the systemic corruption that affects New Jersey.

Corzine believes in the idea that government should provide a bundle of services to the people, and virtually the whole the tab should be picked up by upper middle and upper income families. In short, Corzine believes in the redistribution of income. And so do many Republicans. That’s why we have a one-party system in both DC and Trenton, with two clubs vying for power every election.

Apparently, Corzine believes based on his life experiences that government is necessary to deliver many vital services to the people—healthcare, education, and housing—and intervene in the economy to promote what can be described as “social justice”—equal pay for equal work for women, for example. In addition, Corzine believes that state government should “invest” via a voter approved bond proposal to create the Edison Innovation Fund—a pool of money to support research and other activities to boost employment and innovation in the state.

Corzine’s plan is in reality a left-liberal supply side economic program. He asserts that the state can “leverage” its “investment” in high-tech firms, embryonic stem cell research and other areas to create high paying jobs that would also fill the state’s coffers with more revenue. (You can read the governor-elect’s ambitious agenda on his campaign website (http://www.corzineforgovernor.com/plans/).

Governor-elect Corzine wants state government to “invest, grow and prosper.” Governments do not invest. Governments spend. Only individuals and businesses invest. Making an investment implies that the investor incurs some level of risk, the possibility of losing the investment.

If governor-elect Corzine wants the New Jersey economy to grow and high paying jobs to increase, he should reduce the state budget by billions of dollars, reduce taxes so families and businesses would get the relief they need to spend and invest and contribute to charities. He also must eliminate the regulatory burdens that have made New Jersey one of the least attractive places to do business.

Governor-elect Corzine should take a cue for his administration from one of his party’s founder’s, Thomas Jefferson, who said, “A wise and frugal government, which shall leave men free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor and bread it has earned - this is the sum of good government.” And, “My reading of history convinces me that most bad government results from too much government.

In other words, at one time Democrats were the proponents of both limited government and decentralization of political and social power. Governor-elect Corzine could once again make the Democrat Party the party of all the people instead of the party of entitlement and redistribution.

Murray Sabrin, Ph.D., is professor of finance in the School of Business, Ramapo College of New Jersey, where he is also executive director of the Center for Business and Public Policy, www.ramapo.edu/cbpp.

A Photo Finish or Blow-Out on Election Day?

A photo finish or blow-out on Election Day? Intrigue in 2006?
By MURRAY SABRIN
JerseyPolitics.com.com Columnist

According to all the polls, the next governor of New Jersey will be Jon Corzine. If Corzine wins the election next Tuesday by 1 percentage point or by double digits, Doug Forrester will have no one to blame but himself and his advisors for running an uninspiring campaign.

A GOP gubernatorial candidate should be calling for amending the New Jersey Constitution to eliminate the “thorough and efficient “clause about education. This act would lower property taxes in the burbs by 20% or more. Urban districts then would have to restructure their education spending to get more bang out of the buck for their schools with the funds they would have to raise locally. And if suburban taxpayers want to help fund the urban school districts with voluntary contributions that would be their pregorative. Suburban families should not be coerced to fund mediocre and failing urban schools so the urban Democratic political machines can live off the backs of middle and upper income families.

Forrester should win this race by five or more percentage points. He should win every suburban county—Bergen, Monmouth, Ocean, Morris, Sussex, Somerset and others by huge margins, offsetting Democratic votes in Hudson, Essex, Middlesex, Union, and others. Instead, Forrester may actually lose to Corzine in some traditional Republican counties, e.g., Bergen and Monmouth. We will see Tuesday evening.

Rumors are swirling about both Forrester and Corzine in the closing days of the campaign. The candidates’ integrity, marital fidelity and other character issues are making the campaign look like an out-of-control summer camp of juveniles. If the rumors about both Forrester and Corzine are true, maybe neither is fit to be governor.

H.L. Mencken got it right decades ago when he made this observation of the American political system: “Under democracy one party always devotes its chief energies to trying to prove that the other party is unfit to rule--and both commonly succeed, and are right.”

Another rumor making the rounds is about Jon Corzine. I will not repeat the rumor here, except to say if it’s true and it does not surface before the election, it could be used by the Democrat bosses to hold a sword over Corzine if he becomes the next governor. In other words, Corzine would have to play ball with the bosses, or he could face a political death just like McGreevey did in 2004. In short, maybe all this--the Corzine campaign and election-- is to get him out of the Senate and out of Trenton and have one of the good ole boys—Dick Codey—become governor without a costly campaign. Clever. Very clever.

Fasten your seat belts…we could be in for a bumpy ride in 2006 or 2007.

Murray Sabrin, Ph.D., is professor of finance in the School of Business, Ramapo College of New Jersey, where he is also executive director of the Center for Business and Public Policy, www.ramapo.edu/cbpp.