Here are some thoughts on a few recent and important money-politics headlines.
Garden State Millionaire Tax Defeated. Some late-breaking news was delivered in New Jersey Monday afternoon on the tax front. Democrats there failed in their efforts to override Gov. Chris Christie’s veto of the millionaire tax. Make no mistake: This is a big win for GOP maverick Chris Christie, and a big win for limited, tea-party-inspired government. This story has national election implications.
The Democrats needed two-thirds of the assembly, but without Republicans they couldn’t do it. This ill-conceived tax on income over a million bucks would have hit roughly 16,000 households at an anti-growth 10.75 percent rate.
I call it the “Move to Florida” tax. It would have destroyed New Jersey job creation. One study after another demonstrates what a bad idea it is for states to go down this road. It’s a fiscal dead end. After all, capital goes where it’s treated best. Apparently, this lesson was lost on the New Jersey Democrats, who fortunately lost their tax-hike bid.
And get this: the millionaire tax would have represented the 116th tax increase in the last eight years in the Garden State. Unbelievable.
That begs an obvious question: If the first 115 tax increases failed to balance the state budget, why on earth did they think the 116th would? New Jersey is a mess. My hat goes off to Chris Christie.
The BP Mess. Two important headlines on the Gulf oil catastrophe:
First, the Senate may finally be moving to overturn the Jones Act. That act, of course, is preventing foreign flag ships from helping in the Gulf clean-up effort. What in the world has taken them so long?
Second, in what could become a major story, a federal judge in Louisiana might conceivably overturn Obama’s job-killing drilling moratorium as early as Tuesday.
So at least there’s a chance of some better news out there. Lord knows we need it.
Yuan Appreciation. So China announced a more flexible exchange rate for its yuan. I call it an upward managed, crawling peg against the dollar. It’s ultimately a slow delinking, one that will take years, but it could liberate China from Fed head Ben Bernanke.
Near-term, it’s much ado about very little. There will be no big yuan shift. But at least the China move might stave off a Smoot-Hawley protectionist trade war. That’s the last thing we need right now. So it’s likely good news on the trade front.