Research Paper—phillyfan321

A Lower Sales Tax is Not Necessary for NJ

The current seven percent sales tax in New Jersey is a fair and non-regressive tax. The sales tax rate should not be lowered at all because it is a fair tax. According to Samantha Mactus, author of the article, N.J. Gas Tax Hike Deal: Christie Demanded a Sales Tax Cut, but Will You Notice It?, Marcus said that on the first of January in 2016 the sales tax will be lowered from seven percent to six point  eight seven five percent. This is an unnecessary reduction in the tax because this is a non-regressive tax. According to the New Jersey Sales Tax Guide, grocery items are exempt, prescription medication is exempt, luxury items are taxed, clothing is exempt, and there are ways to  avoid paying this tax. A regressive tax is a tax that disproportionately taxes people with a lower income more than those with a higher income. While one may say that people with lower incomes may feel that they pay more of their income towards this tax, they can choose to not pay this tax all together. If a tax can be made optional for some people, then they have the choice not to pay for it. Since essential items are not taxed, then this is not a regressive tax on the poor. If someone with a low income chooses to buy a McDonald’s milkshake, then they choose to pay the tax. People with lower incomes have to buy grocery items which are not taxed. If any tax should be lowered, it should be a tax that helps those with lower incomes because they are in need of a tax cut. Lowering a luxury tax on items that some people with lower incomes may not be able to afford does not help those with lower incomes.

In New Jersey groceries are not subject to the sales tax. The tax rate on grocery items is zero. All people need to buy groceries because they are essential to survive. While people obviously choose when to buy groceries, people have to eat to live. Those who do not make a lot of money or use EBT cards do not have to pay a tax on their grocery items. The  people with low incomes have to really budget their money and paying a tax on groceries is not something they have to do in New Jersey. Some States do have regressive sales taxes that tax grocery items. According to the article, State by State:Are Grocery Items Taxable, some examples of States that tax groceries are Kansas, Alabama, and Mississippi. It would be regressive to tax groceries because everyone needs to buy groceries and those with lower incomes would pay a higher percentage of their income towards the sales tax on groceries. Since New Jersey does not tax groceries people with lower incomes do not have to pay a higher percentage of their income on the sales tax towards groceries.  While prepared meal from restaurants are taxed, raw items are not. Some examples of exempt items are: milk, water,  juices with at least fifty percent juice, eggs, bread, raw or frozen vegetables, canned food, deli meat, and cheese. There are many other kinds of tax free food sold in stores, but by not taxing these essential items, there is no extra tax burden to buy essential items. People will do not have to pay any extra tax to buy their weekly groceries.

Everybody needs to have clothing. Clothing is clearly something that is essential for everyone to have and to wear. The winters in New Jersey can get very cold, so people have to especially buy heavy winter coats. These winter coats fall under the clothing category of the sales tax law, so they are exempt. People can buy tax free clothing in New Jersey. It is important to note that some winter coats can be expensive so this tax exempt item saves people money. This is clearly an example of a non regressive sales tax because  an essential item is not taxed. Clothing is something that everybody has to wear and lowering the sales tax will not make clothing cheaper since it does not tax clothing at all. 

While one may believe that sugary drinks or cigarettes are essential to some them, nobody can say that prescription drugs are not essential. At some point in their life, everybody has needed to buy a prescription medication. Another example of a tax exempt essential item is prescription medication. There is no tax on prescription medication because these medications can be life saving to people. Prescription drugs can be life saving in some situations, making the case that they are essential. It would be horrible if someone could not afford their medication because they had to pay a tax on it. If essential medications were taxed, then yes it would be regressive because those people with low incomes would have to pay even more for their medication. Since this is not the case in New Jersey, the tax is not regressive because people do not have pay sales tax on their prescription medication.  The tax would be regressive if prescription medication was taxed because people with low incomes would have to pay a higher percentage of their income and people with a higher  income would pay a lower percentage of their income on prescription medication if it was taxed. This is not the case in New Jersey since prescription medication is exempt from the sales tax.

The sales tax does apply to luxury items and non essential items that people buy out of luxury or convenience. Prepared meals at restaurants and fast food restaurants always charge the sales tax. Cigarettes and alcohol are clearly non essential items.  One can live their life without buying either, so if someone can not afford cigarettes or alcohol due to taxes, then they will just have to do without them.  Some other taxable items that are non-essential are: balloons, soda,cigars, dog food, and Halloween masks. These are all examples of taxed items that are non-essential to survive. The same cannot be said about grocery items or prescription medication. If someone chooses to go to a restaurant then they are choosing to pay that tax. This is clearly acceptable because people choose to go out to eat, but people have to buy grocery items. People with low incomes choose to pay this tax when they go out to eat, but they do not have to pay this tax if they only buy groceries, which are tax free. The fact that people have the option, regardless of their income, to avoid paying the tax makes it non regressive. 

The sales tax can also be avoided if people take certain measures. One example of how a person can avoid paying the sales tax is to make their own sandwiches instead of buying them prepared or made to order at deli’s. In New Jersey deli meat, bread, and vegetables are tax free. If someone went to a deli and ordered a ham and cheese sandwich, that sandwich would be taxed. A way one can avoid paying for the tax would be to buy a loaf of bread,ham, and cheese from the deli and then make the sandwich at home. Another example of a way one can avoid paying the sales tax would be buy home insurance to cover costs for labor if damages occur. Labor is taxed in New Jersey,  according to a letter written by the Division of Taxation-S&U Tax: Home Improvements. So if someone needs repairs due to damages the cost of labor is taxed. If someone has home insurance then the insurance company pays for the cost of labor and one can avoid the sales tax. A third way for someone to avoid paying the sales tax at a restaurant or convenience store would be to for somebody to buy coffee beans and brew their own coffee instead of going to a convenience store to buy already brewed coffee, which is taxed. The fact that this tax can be avoided means that people who may not be able to afford to pay the tax can avoid paying the tax altogether.

The sales tax does apply to luxury items that are non essential. Some taxable items are: cigarettes, alcoholic beverages, and prepared meals. On a chart posted by the New Jersey Department of Taxation, there is a list of the minimum price cigarettes can be sold at. On top of the minimum price, cigarettes are subject to the sales tax. Since cigarettes are not an essential item it is not a regressive to have a high tax on cigarettes. Though nicotine gum is tax exempt to try to help people quit smoking. There is a clear difference in taxing luxury items and taxing essential items. People can choose not to pay this tax at all because in a way it is an optional tax.

Let’s say someone makes three hundred dollars a week and they need to pay for groceries, rent, insurance, and clothing. None of the items they need to survive are taxed at all. Buying only bare minimum essentials means that one does not spend their money going out to eat, buying fast food, buy alcohol or tobacco, or anything that is not essential to stay alive. A person with a low income can buy everything they need to stay alive without paying the sales tax. A tax on anything for the working poor adds up quickly and can cause people to go into debt to afford thing they need to survive. People do not have to pay this tax on items they require just to get by and live.

The current sales tax rate of seven percent is currently acceptable and a fair tax. What makes the tax fair is that it is a convenience and luxury tax that people pay. This is not a  regressive tax at all because there are exemptions and ways to avoid paying the tax. The sales tax does not disproportionately tax a higher percentage of someone’s income, unless that person chooses to pay the tax out of their own convenience. I believe that this tax should not be lowered because it is a fair tax that brings in a lot of revenue to the State of New Jersey. Lowering this tax will not be a tax cut on the working poor. Tax cuts are meant to help people keep more of the money that they earn. There are likely other ways to cut taxes that would be a better solution for those with low incomes, instead of cutting a tax on luxury items. In brief, out of all the taxes the government imposes, the sales tax is one that is not a regressive tax and should be left at it’s current rate.

Works Cited

New Jersey Sales Tax Guide.” (n.d.): Web. 30 Oct. 2016.

“Sales Tax By State: Are Grocery Items Taxable?” TaxJar Sales Tax Blog. N.p., 30 Aug. 2016. Web. 06 Nov. 2016.

NEW JERSEY DIVISION OF TAXATION MINIMUM LEGAL PRICES ON CIGARETTES AS OF AUGUST 2, 2016  (n.d.): n. pag. Web. 13 Nov. 2016.

NJ Division of Taxation-S&U Tax: Home ImprovementsNJ Division of Taxation – S & U Tax: Home Improvements. N.p., 20 Oct. 2014. Web. 13 Nov. 2016. b. 13 Nov. 2016.

Samantha Marcus. “N.J. Gas Tax Hike Deal: Christie Demanded a Sales Tax Cut, but Will You Notice It?” NJ.com. N.p., 29 Oct. 2016. Web. 30 Oct. 2016.

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