I like Sal Bonaccorso, the mayor of Clark. He is the only mayor from whom I have heard the magic words, “We will do more with less.”

In response to severe budget constraints, Clark has demonstrated some pretty innovative thinking and Mayor Bonaccorso has asked his Department of Public Works to pitch in and do more with less. And to their credit, the Clark employees readily bought in.

All the towns around here are in a quandary. State aid is down. Revenue from fees, permits and fines also is down. A lot of towns also have lost property tax revenue as houses have gone into foreclosure. Because business property values also have fallen, many businesses have appealed their assessments and lowered their taxes substantially.

Our towns are running out of money.

The solution favored by the unions representing municipal employees is pretty simple. Just raise taxes. Hey, they worked hard to get a municipal job that gives them high salaries, the best benefit program anywhere in the country and a 35-hour work week. Why shouldn’t town residents pay more? Who cares about their kid who wants to go to school or the fact that mom just got laid off.

Fortunately this is not the solution favored by most mayors and town councils. I think they have a much better feel for how severe this crisis is, and how untenable it is to expect their residents to fork over more of what little cash they have left.

The alternative typically utilized by town governments takes one of two major forms. The first is layoffs. As never before, towns are being forced to curtail bloated workforces. It is without question a harsh response to the recession. However, it also is the solution that most businesses have had to use to survive.

The second technique used to save money takes the form of furloughs. The state government also is using this technique. Furloughs have the advantage of sharing the pain. They also are a default pay cut for municipal workers, but since you are losing the work performed by the employee, the true amount of the savings is somewhat questionable.

Never, never, never discussed is a pay cut for city workers.

This is probably the most widely used adjustment in industry. Sometimes it is a simple cut in base pay. Other times it is a cut in bonuses that are so pervasive they have become part of expected income. In my own case, my income is going to be down dramatically this year in response to the recession. Let me tell you, I am feeling pain and the last thing I want to do is pay more taxes to keep someone in a cushy job.

In town after town I hear the cry, “How can you expect us to do more with less?” Well, personally, I think we should all be expected to do more with less. We should all work a little harder and a little longer. I know very few who have the luxury of a 40-hour work week, let alone 35 hours.

Mayor Bonaccorso is asking his employees to do more. He is telling them that he will not lay them off, ask them to cut their pay or take furloughs.

He is telling them that if they want to keep their jobs they are going to have to work harder. They are going to have to do more for the residents of Clark. They are not going to get more pay for this. They simply are going to be more productive members of society.

The mayor is to be commended. Others should look to his example.

Last month, on April 15, tax day, I attended a presentation by Assemblyman Joe Cryan (D-20) on next year’s budget. It was an excellent presentation where Assemblyman Cryan outlined the efforts of the Corzine Administration to produce a rational budget in the middle of the worst recession in generations. The Assemblyman described it as a budget of sacrifice and cutback, furloughs and belt tightening.

So far so good.

Then came the kicker in his presentation. Even with all this sacrifice and belt tightening the state government needs more revenue, i.e. a tax increase. The Assemblyman said don’t worry, however, taxes would be increased for only the top 1 percent of income earners, those making more than $500,000 per year.

Cryan said there were fewer than 30,000 filers in this category, and they could well afford to ante up a bit more to keep the state solvent. And it had been shown by Governor McGreevy that the wealthiest don’t flee the state when their taxes are raised.

Assemblyman Cryan is also the chairman of the Democratic Party for the state, and what he said was great politics. First he appealed to all of us with the talk of cutbacks and sacrifice. Then he said that the pain of the tax increase would be limited to only 1 percent of the population. The other 99 percent of us get off scot-free.

Good politics this may be, but it is bad policy.

Our politicians seem to forget that the annual variation in income is the greatest for that top 1 percent of earners. In other words, when times are good, these folks make a lot. This floods government coffers and leads to increased spending. Everyone is happy in these fat years.

In the lean years, however, the folks at the top make a lot less, and the government that is used to feasting on their largesse is suddenly put on a diet. Remember, nearly half of all state income tax revenue comes from this measly 1 percent of earners.

Thus a drop in income of just 10 percent for these earners results in a drop of 5 percent in state income tax revenue. Given that much of the income in this group is related to investment performance, it is easy to see why we are facing such a deep hole.

All we have to do is take a look at our leader, Governor Corzine. In 2007 the Governor had investment income of $11.8 million. His contribution to the state through income tax was just more than $1 million.

In 2008, however, the Governor lost nearly $3 million. That means that his state and federal taxes are zero. Here’s one of the richest guys in the state and he isn’t paying anything. A lot of the top 1 percenters are in this same fix. Investment revenues are down, bonuses are down and tax obligations are down.

On April 15 I mentioned to Assemblyman Cryan that I would be surprised if the tax collections that they expected for 2008 were accurate. I expected them to be way short.

And way short they are, with the shortfall now estimated to be $1.2 billion for this fiscal year. I would guess that this fact also will necessitate a new estimate of 2009 revenues. The economy is not recovering and large income growth in any sector certainly is not on the horizon.

So, what will they do? Will they see an even greater shortfall and raise taxes on the most volatile even more? If more tax revenue is needed, from a policy perspective, it would be much more sensible to raise taxes for a far greater number of people, maybe the top 50 percent of income earners.

We are, however, dealing with politicians. Why would we ever expect anything sensible to come out of them?

James Coyle
President

Mrs. Collins complained to the police, but she was told to take the boy home and she was sure to realize she was mistaken. A couple weeks later she returned to the police with dental records, and instead of admitting their error, Christine Collins was committed to a mental institution. Only massive public outrage led to her release.

This story was made into a movie, The Changeling, which I watched recently with my wife. It was a very disturbing movie about the abuse of power. Afterward, my wife, who like me had been horrified by the events portrayed, commented that “thank goodness abuses like that can no longer happen.”

Unfortunately abuses like this do occur with great regularity. It is only the public outcry that seems to have diminished.

Union County is blessed with an organization named the Union County Watchdog Association. Led by Tina Renna, the group works tirelessly to keep Union County government honest. They attend all the Board of Chosen Freeholders meetings. They demand explanations of nepotistic hirings. They track expenses of county government offices and employees and point out abuses. They expose cover-ups and double dealing. They do all the things that good government requires.

And how are Ms. Renna and her group of watchers repaid? With ridicule, abuse, character assassination and sanction. It is incredible and disheartening to witness the treatment these people receive. They are taxpaying, voting citizens who are exercising their constitutional rights to question their elected officials and hold them accountable for their actions. Rather than be treated w ith courtesy and respect they are vilified and demeaned. Often, like Christine Collins, their sanity is called into question.

Recently a particularly ignoble piece of literature has appeared called the Kruger Report. It is sent out anonymously, but given that it is unflagging in its support of the freeholders, on e can guess its origin. One can also only guess at the intent of its name. Is it named for Freddie Kruger, because it certainly has a slasher feel to it. The intent of the Kruger Report is to slander Ms. Renna, to undermine her credibility and to have us think she is insane (shades of Christine Collins).

In spite of all this, Ms. Renna and her watchdogs continue the watch. With the Open Public Records Act (OPRA) they are able to get information that government would rather hide. The Watchdog Association had to take Union County to court to get this access. They take what they find to freeholder meetings and ask for clarification or justification or simply shine the light where the  powers that be would rather it not be shown.

Recently, the American Civil Liberties Union intervened on behalf of the Watchdog Association when the freeholder board denied them the ability to ask questions regarding relatives on the county payroll. Under threat of another unwinnable lawsuit, the freeholders apologized and now allow the questioning.

Because of the internet, the Watchdog Association is able to make public its findings. Their website, www.countywatchers.com, provides a wealth of information on what is happening in  the county, information that is rarely available in any other place, especially since the demise of the county section of the Star Ledger. It is a site that I visit daily.

What really differentiates Tina Renna from Christine Collins is the lack of public outrage. When Collins was attacked, the citizens of Los Angeles rose up and demanded her release in public demonstration. Perhaps if more county residents were to read www.countywatchers.com they would realize that this is just as important.

Quite a few years ago I was engaged in a lively discussion with one of my closest friends and mentors over what is the fair share for the rich to pay in taxes. With a graduated tax system at both the state and federal level, the wealthier you are the greater the percentage of your income goes to paying taxes.

My friend thought that the amount of income tax paid by the wealthy was far lower than it should be. The wealthy have more and can thus pay more, not only in gross amount, but also as a percentage of their total income.

I asked him what the level should be. How much of the total taxes collected should come from, say, the top 1 percent of income earners? Should it be 10 percent, or 20 percent? What’s the fair level?

My friend realized I knew what the number actually was and refused to say what he thought it should be, only that it was too low.

So how about my readers; what do you think the top 1 percent should contribute? 10 percent? 20 percent? What’s fair in your view?

Well now that you have the number in your mind, here’s how it actually plays out.

In 2006, the last year on a federal level I could find numbers for, the top 1 percent of taxpayers paid a whopping 40 percent of the total tax collected. The top 5 percent paid 60 percent; the top 10 percent paid 70 percent; the top 25 percent paid 86 percent; and the top 50 percent paid 97 percent of all personal income taxes collected. The bottom 50 percent ended up contributing only 3 percent.

To give some perspective, the top 1 percent earned more than $389,000. The top 5 percent earned more than $154,000. The top 10 percent was at $109,000+, the top 25 percent at $65,000+ and the top 50 percent at $32,000+.

In New Jersey, the story is much the same. In 2006, before the McGreevy tax increase, the top 1.5 percent of taxpayers accounted for 42 percent of the taxes collected. Those earning more than $250,000, or the top 4 percent, accounted for 54 percent of the taxes collected. Those earning less than $100,000, nearly 80 percent of the total returns, paid only 19 percent of the taxes.

Absent the fairness discussion, it’s easy to see why this isn’t good policy, especially in a state like New Jersey. The top tax rate in New Jersey is 6.5 times the lowest. Every dollar of income decline at the top income level lowers state revenue by 6.5 times as much as a dollar lost in the lowest tax bracket.

So what happens when that hotshot bond trader who works on Wall Street doesn’t get a bonus this year because the president has capped his compensation at $500,000 instead of the $2.5 million he made last year? The state’s tax collections fall by $180,000 and the federal government loses $700,000.

This is exactly what we are seeing, and we can expect a huge hole in New Jersey’s tax collections for both this fiscal year and next.

Anyone in business knows that if you depend on a very few clients for your revenue you can wake up one day and be out of business. The alternative is to diversify.

On a tax basis this can be done by sharing the tax burden more widely, or it can be done by finding new sources of revenue. You could also cut expenses, but in government that is the last thing ever considered.

Unfortunately, I expect New Jersey to follow the New York example and raise income taxes on the top earners even more. What politician would ever discuss a tax increase for the many when he can discuss it for the few? The tyranny of the majority is alive and well and as shortsighted as ever.

James Coyle
President