Connecting the Dots

On his first day in office, Governor Corzine bemoaned the state’s anemic economic performance. Quoth Hizonor:

"To put it simply, we are growing too few jobs, losing high-paying, value-added jobs and replacing them with lower-paying service work. 'To meet this challenge we will embrace pro-growth and pro-business initiatives."

The Governor offered no thought respecting the genesis of this difficulty, but one can infer causality from the rest of the speech. There, he singled out former Governor Codey, praising him for an initiative to retain Verizon in state. What induced Verizon to remain? A $64 million grant and a waiver of sales and use taxes on the expenses of expansion.

Put succinctly: Verizon responded to a tax cut.

Now, if the REPUBLICANS were to pull a stunt like that, and offer a huge subsidy to ONE company, the Dems would – quite properly – deride it as “corporate welfare”. While New Jersey hemorrhages thousands of jobs, a subsidy to one high profile case provides ample opportunity for politicians to congratulate themselves on how government and private industry can work together to save jobs. All while they ignore the real culprit: New Jersey’s obscene taxation philosophy.

Just as Verizon responded positively to a tax cut, hundreds – if not thousands – of smaller, less visible employers – and their highly paid employees – respond reciprocally to the idiotic tax policies imposed by the McGreevey-Codey administration. These two, working in concert, doubled business taxes, sucking billions from the productive sector, employing it to massively bloat state spending, primarily on Democratic constituencies. Unsatisfied with making New Jersey among the least attractive states in which to do business, they then declared war on high earners, imposing the fraudulently named “millionaires’ tax” on highly compensated employees.

Is it any wonder that they've been leaving the state, or never coming here in the first instance?

Rich folks did not get that way by being stupid. Pennsylvania’s income tax rate is one third that of New Jersey. Even New York’s highest rate is lower than ours. (Who but the Democrats could turn New York into a tax haven for the rich?) A resident of Pennsylvania working in New Jersey pays PA taxes. On a salary of $1 million per annum, the income tax savings alone amount to more than $40,000 which, even for a rich guy, isn’t chump change. How much is a few minutes extra commute worth?

Couple the income tax savings with property taxes about half as high and a much friendlier regulatory environment (the Highlands? What’s that?) and, voila, not only do the highly compensated employees have a huge incentive to leave, so do their businesses.

Verizon is a big employer, but small business generates the vast bulk of employment opportunities. The Route 78 corridor is now awash with New Jersey tax refugees (those folks CLEARLY didn’t move there for the scenery in Allentown and Bethlehem). If our Governor truly wishes to attract and keep businesses, and the high earning folks they employ, the solution is obvious:

Repeal the corporate business tax increase. Repeal the “millionaires’ tax”. Instead of considering grandiose plans to “invest” (read: spend taxpayer dollars) on particular industries, cut taxes for ALL employers and their highly paid employees.

Although tax cuts are always free – spending being expensive – to the extent that these need to be “paid for”, simply scale back spending to the level at which McGreevey started. Cut EVERYTHING which is not absolutely necessary, no matter how much the folks feeding at the public teat squeal at their new, pork free diet.

Simply put, the Governor’s speech precisely proves what the GOP has been saying all these years: envy inspired tax increases drive businesses, jobs, and high earners out of state. It’s not rocket science; it’s common sense. Just as Verizon responded to a tax cut, so will other businesses. To paraphrase a famous phrase, if you cut taxes, they will come.

Charitable Immunity Redux

Consider two big tubs, each one full of money.

One tub we’ll call “corporation”. The people who put the money into the tub we’ll call “investors” or “shareholders”. They hire employees who run a business. If the business does well, more money will be put into the tub and distributed to the shareholders. If the business fails, or if someone they hire causes harm to a third party, money will be taken out of the tub, and the investors will lose.

We’ll call the second tub “charity”. The people who fill this tub with money are called “donors”. Other people – priests, teachers, Little League coaches, Boy Scout Leaders, etc. – run the “charity” and take out money to help the poor, the sick, the hungry, the young, etc., who we’ll call “beneficiaries”. If those leaders do something wrong, and money is taken out of the tub to pay for that harm, the beneficiaries – not the leaders – suffer.

And that is the essence of the debate on charitable immunity. It’s why, in answer to Mr. Koloff's question, it’s a “big deal”.

Society long ago decided that when someone working for a corporation causes harm in the course of doing business, the injured party should be permitted to dip into that tub of money as compensation. The corporation could simply increase the prices of whatever it was selling to cover the cost of the judgment, or of the necessary insurance premiums. And, if the costs got too high – if the business did more harm than the pot of money could pay for – it would go out of business, and the investors would lose their money.

But what happens if the priest or the coach does something wrong? Charities have no product to sell; they can’t increase their prices. If we let people hurt by volunteers or Boy Scout leaders dip into the tub, the people who suffer are those the charity was established to help.

Simply put, every nickel a charity must spend to pay a judgment or buy insurance is a dollar not being spent helping the poor, the sick, the young, the elderly, etc.

Annonyingly, the opponents of charitable immunity refuse to acknowledge the obvious: you can’t punish a charity – on any institution – because they simply don’t exist. They’re nothing more than legal fictions, pieces of paper filed with the Secretary of State. Trying to punish a school, for instance, for the misdeeds of a teacher is akin to walking up and kicking the building. When you take money from the entity, the children – not the teacher, and not the school – suffer.

Nothing prevents someone injured by a coach, by a priest, by a volunteer, or by a Scout Leader from suing them. And they should pay – to the extent they can – for their misdeeds. But permitting a suit against (say) an AIDS hospice for the acts of its director strikes not at the malefactor, but at the patients.

Or, to put it in specific context, permitting judgments against “the church” when its priests abuse little children hurts not the priest, nor the bishops, nor the fictitious institution, but the poor, the hungry, the homeless, the young, the old – in short, all of the people helped by the programs “the Church” assists.

Mr. Hardewicke and other victims of beastly acts can be forgiven their desire for revenge, but what they seek is NOT “justice”. “Justice” requires that the guilty pay and, when victims seek money from a charity, they are demanding compensation for their injuries from people who had no hand in inflicting those injuries. Institutions cannot act except through people, and those people should be fully responsible for their acts. But they should not be permitted to drag the poor, the sick, the old, and the young down with them.

Any thoughtful legislator needed to make the following decision:

As between the victims of sexual abuse, or the poor people who were the intended beneficiaries of the donors’ largesse, who gets first crack at that tub of money?

Making investors bear the costs of their agents’ actions makes sense. But what justification exists for making charities responsible for the misdeeds of those who purport to serve them? Only real people can do harm; why should the obligation to atone for their misdeeds not remain exclusively on the shoulders of the offenders? Why tap into a kitty designed to help the poor in order to pay judgments?

To reiterate, “institutions” do not exist except in our imaginations. They are nothing more than groups of people. Every single person whose actions caused harm should answer for their behavior. But simple decency requires that we use the money intended to help the poor and the sick as the donors intended it to be used, and not misdirect it to other causes.