Politics can be a very ugly game, ranging from passionate debates on the country’s most pressing issues to sexual scandals reminiscent of Hollywood.
However, when the animosity abates and leaders on both sides of the aisle come together for a common goal, an improbable mosaic is formed which writes our next chapter.
Fresh off the heels of election season, I had the opportunity to sit down with NJ’s newest senator-elect, Vin Gopal, and get a sneak peek at the future of politics and economics.
Social issues have been dominating the headlines (i.e. NFL players kneeling for the anthem in the name of “justice”), but fiscal responsibility is the less glamorous although equally important factor in swaying a voter’s choice. Gopal defines fiscal conservatism as “a public policy philosophy that relies heavily on free-market responses to social ills”, and fiscal liberalism as “one that relies more on a governmental response.” In other words, let the people figure it out, or ask the government to pitch in. A responsible voter is tasked with gauging the relevant cost/value of requesting or foregoing such government assistance.
In regards to where the country’s finances are headed, Gopal touts, “The stock market seems stable and our national economy has, for the most part, bounced back from the Great Recession. It wasn't long ago in the end of 2008 that the country was on the brink of a Great Depression.” At the publishing of this article the DIJA traded at 24,228 up almost 400% from the March 6, 2009 low of 6,443. “Technological advances mean that new industries are popping up every day, creating good-paying jobs, and people feel more confident to strike out on their own as entrepreneurs and small business owners. Over half of NJ workers are employed by small businesses which gives me great hope”, says the optimistic 32-year-old from Long Branch.
On the flip side, Gopal states, “…the continuous chaos in Washington gives me pause. The economy would greatly benefit from more stability in politics at the federal level. New Jersey could face serious harm because of some of the policies coming out of Washington pertaining to tax deductions.” The Trump Administration’s tax plan looks to eliminate deductions for state and local income taxes, already a hit to New Jerseyan’s. “Governors in both parties really let our state down over this past many years,” admits the small business owner turned politician. NJ has received 11 credit downgrades since Governor Chris Christie took office. Political mishaps have been masked by a tremendous tax base fueled by an innovative workforce coupled with unparalleled geography (NYC access, international ports, etc.).
Some of the issues Senator-Elect Gopal has particularly focused on are pensions, education funding, and government waste. “I get a lot of confidence from action I see on the local levels of government. Open-minded elected officials are embracing policies like municipal consolidation and school district regionalization, which for so long were seen as taboo or unthinkable. Eliminating redundancies not only ensures residents are getting the top-notch services they deserve, but it delivers real, immediate property tax relief.” He often revisits Former Assembly Speaker Allan Karcher’s book, “New Jersey's Multiple Municipal Madness”, for guidance.
There are so many towns in NJ that 75 of them share the same name. With 565 municipalities in the state, only two mergers have transpired in the past 50 years (Princeton Township and Princeton Borough in 2013 and Pahaquarry’s six residents with Hardwick Township in 1997). Most residents can agree an overflow of Superintendents, Principals, Town Administrators, Police Chiefs, etc. receiving salaries, benefits, and pensions becomes unaffordable and cumbersome. These all contribute to NJ’s $44 billion pension fund deficit. Governor Christie has been attacked by unions for addressing the pension crisis head on, although he surprisingly has contributed more to the fund than the past five administrations combined. Political leaders know where the greatest expenses lie, but delivering a tenured professional a pink slip is easier said than done.
I asked Gopal how a politician can possibly balance these coveted benefits and other entitlement programs with the pain of paying taxes. “Entitlements cost money, and we need a long-term plan to keep pension and social security funds soluble, while also addressing concerns about the tax burden. No one should be spared from paying their fair share in taxes, but we also must ensure that retirement-age residents who have been paying into these programs their entire life can get the benefits they’re rightfully entitled to. I campaigned hard on the issue of consolidation and regionalization. It was well-received and a big part of my 4,000+ vote victory. New Jersey residents are tired of paying high taxes and are finally letting go of their unhealthy addiction to homerule.”
Perhaps the most infamous solution to all these costs are Property Tax revenues. NJ has the highest property tax rate in the nation at 2.29% or $4,029 in annual taxes on a $175,700 home (median value in the US), this is nearly quadruple the national average. With nearly $15 billion in school taxes paid in 2016 alone, New Jerseyan’s see 52% of their property taxes go straight to education. In NJ, “Property taxes are our most inefficient tax because they’re based on property values as opposed to income. So, while incomes remain stagnant, property values and property taxes increase, and families are hit harder each year. It’s an untenable situation.”, states Gopal.
Politicians are personally under as much scrutiny as their government budgets. President Trump garnered a great deal of support by “self-funding” his campaign and then waiving the $400,000 Presidential salary. I asked Mr. Gopal for some more info on how these elected officials get paid. “Elected Officials are paid using dedicated funds; members of the Legislature receive an annual salary of $49,000. Politicians may be notorious for trying to increase their own salaries, but New Jersey voters are pretty vigilant, and don’t let things like that slip by.” Fair enough.
In defense of all the negative labels New Jersey faces, Gopal leans back on “top notch schools led by outstanding educators, a well-educated and creative workforce, and a booming small business economy. But it’s true that New Jersey has an affordability problem, and for too long our leaders have kept kicking the can down the road when it came to putting our state on solid financial ground. We can start rebuilding that strong financial foundation cutting red tape that’s holding new businesses back, reducing property taxes through more shared services and municipal consolidation, and eliminating waste and duplication at the statewide level.”
Vin Gopal will be taking office in January of 2018, along with a slew of new faces, including Governor-Elect Phil Murphy. Let’s see how NJ and the nation move forward, hopefully with more progress and less fighting than we’ve all become accustomed to.
Vin Gopal is a Democrat who will represent the 11th District in the NJ Senate starting January 11, 2018, previously held by Republican Senator Jennifer Beck. He is NJ’s first Indian-American to be elected Senator. He is the founder of Direct Development, LLC and The Community Magazine.
Bryan Kuderna is a Certified Financial Planner™, Life Underwriter Training Council Fellow, and Investment Adviser Representative with Kuderna Financial Team. He is also the author of the best-seller "Millennial Millionaire."
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