Tax Analysts Blog

Governor Christie Does Not Understand Tax Policy

Posted on Aug 21, 2013

Like many governors, New Jersey's Chris Christie is not well versed in the principles of sound tax policy. In fact, if recent events are an indication, he is ignorant of the basic concepts. On August 19, he vetoed a very good tax policy measure (S 1868). That law would have provided a sales and use tax exemption for sales of services to prewritten, or canned, computer software delivered electronically and used directly and exclusively in the purchaser's business, trade, or occupation. Everyone who has ever studied or thought about tax policy knows that business inputs should never be subject to sales tax. The bill Christie vetoed would have exempted business purchases of various software from sale tax. That is classic good tax policy. His veto is classic bad tax policy. If you would like to know why, read Bill Fox and LeAnn Luna's excellent paper published in State Tax Notes.



In his veto message, which are usually cowardly statements of nothingness, Christie said that he cannot support the legislation because it would have a fiscal impact on the state and was passed outside of the budget process. What he should have done is sign the bill into law. Making business pay sales tax is never good policy. He had an opportunity to fix a small problem and chose not to. Yes, it would cost $5 million a year. So what? Interestingly, the legislature understood. The Senate passed the measure 39 to 0 and the Assembly approved the bill in a 77-0 vote.

Read Comments (2)

patrick brennanAug 27, 2013

how do you spell "override" in New Jersey?

39-0 and 77-0 again?

David BrunoriAug 27, 2013

Patrick, What a great question. I need to check why they did not consider that
option.

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