February 22, 2019
New Jersey Lawmakers Are Trying to Tax the Rain
This gives new life to the saying, “when it rains, it pours.”
Image Credit: Pexels
Sometimes life mimics fiction. And sometimes life is so much stranger than fiction you have to double check the headlines to ensure they aren’t satire. The latest doubletake comes from New Jersey, where, under the guise of environmentalism, local legislators have passed a new tax on—wait for it— the rain.
Governments are known for a lack of creativity and an uncanny ability to think only inside the box. However, when it comes to getting creative with inventing new forms of taxation, they never disappoint. Chicago, for example, recently implemented a “PlayStation” tax on its residents as part of the city’s previously existing “amusement tax,” which, just as it sounds, taxes individuals on almost all forms of entertainment.
California, on the other hand, recently tried to get away with unprecedented levels of extortion when it tried to tax residents for their drinking water and text messages. The water tax is still on the table, but luckily, the Golden State did not succumb to the new ridiculous texting tax. New Jersey, though, might not be so lucky.
Blame It on the Rain
To be perfectly clear, while the new tax is being referred to as the “rain tax,” it doesn’t actually tax the rain itself, but that doesn’t make the context of the legislation any less absurd.
Bill S-1073 seeks to penalize businesses and homeowners whose property contains paved surfaces, like a driveway or a parking lot. When it rains, the rain acts as a medium, transporting any pollutants it picks up from paved surfaces, like brine and rock salt, and then depositing it into sewers and drains. And since the pollutants are thought to have originated from paved surfaces, the state has determined that property owners are responsible for any negative environmental impacts that result therein and should be penalized accordingly.
The legislation itself does not actually allow the state to collect any taxes, however. Instead, it allows each of its 565 different municipalities to create their own stormwater utility systems to minimize the runoff problem. Each locality will then charge each homeowner and business based on what the bill calls “a fair and equitable approximation” of how much runoff is generated from their property.
The legislation states:
Under the bill, a county, municipality, or authority (local unit) that establishes a stormwater utility is authorized to charge and collect reasonable fees and other charges to recover the stormwater utility’s costs for stormwater management.
As is the trend these days, supporters are praising the bill as a heroic move to protect the environment, though there is no real evidence that any significant harm is being done. Yet, legislators would have you believe there is a crisis at hand.
Senate President Steve Sweeney tried to convey the seriousness of the problem, saying, “With all the salt we’ve had on roads recently, that’s all running into the sewer systems, so you don’t ignore the problems because they don’t go away.” However, this winter has actually been mild for the state, with fewer snow falls than usual, meaning there has not been any sudden influx of rock salt pouring into the sewer systems this season.
A local writer, E.W. Boyle, highlighted the true idiocy of this proposed tax, writing:
Now, since our roads have been treated during winter storm events for over 80 years, with no apparent environmental impact, one wonders what took them so long to notice that there is salt runoff into creeks, streams and estuary rivers during subsequent rain events. No, rather what they noticed was the potential for yet another tax levy.
Boyle hits the nail on the head, and he is not alone in his opposition to the new tax. Republican state senator Tom Kean Jr. also criticized this proposal for the burden it places on New Jersey residents. Since each municipality is in charge of setting its own rules regarding the collection of this tax with very little oversight from any other governing entity, it is ripe for potential abuse. Keane said, “We all want to protect our environment. We all want to preserve it for future generations, but this is a weighted tax.” He continued, “The citizens of New Jersey…really [have] no way to defend themselves against tax increases at local levels.”
Since the bill gives local governments carte blanche to set the rates and collect the revenue, it makes it harder for residents to voice their concern if they believe they are being asked to pay too much. Keane later added:
…you shouldn’t create unfair authorities with uneven taxing practices…You’re creating a new layer of government that will not be regulated. The concern is uneven enforcement.
While uneven enforcement is certainly a concern, it is not the only problem the new rain tax inflicts on New Jersey residents. The legislation also comes with a hefty price tag that property owners will be responsible for footing.
From Bad to Worse
New Jersey is currently one of the most heavily taxed states in the country. And yet, it is going to burden its residents even further with the passing of this bill. According to the EPA, it will cost the state of New Jersey $15.6 billion to upgrade its storm drain system. However, the cost to Garden State taxpayers could end up being significantly higher.
New Jersey’s Office of Legislative Services, which usually determines the fiscal impact of state policies, could not shed any light on what this might actually cost residents. Since each local municipality is in charge of setting its own rates for each property owner, there is really no way of estimating the projected costs at this time. And given the nature of government, it is highly probable that taxpayers will end up paying more than their “fair” share of the burden.
Chris Sturm, a supporter of the bill and a water policy “expert” at the nonprofit organization New Jersey Future, attempted to downplay the impact this will have on homeowners. Sturm commented, “This will be negligible for the vast majority of homeowners. This is for properties that have large impervious surfaces.” While no one, including state officials, is sure of the fiscal impact this will have on residents, there is something else quite disturbing about his statement.
These properties with “large impervious surfaces” are places of business. They are the very institutions responsible for creating jobs, wealth, and prosperity within the state. And yet, rather than celebrating these titans of industry for their contributions, state lawmakers are attempting to impose onerous taxes on them. This is yet another example of governments using their taxing powers to turn private businesses into their personal coffers.
To make matters worse, any individual or business who does not pay their “rain tax” will be charged interest and have a tax lien imposed on them by the state, the very same type of action taken against those who fail to pay their property taxes.
New Jersey is, unfortunately, not the first state to attempt to inflict this type of tax on its residents. In 2012, Maryland instituted its own version of the rain tax, but it was not received well by the taxpayers. In 2014, Republican Governor Larry Hogan altered the law and allowed nine counties and the city of Baltimore to opt out of the state’s rain tax, so long as each municipality promised to address the Chesapeake Bay runoff issue on their own.
Hogan commented, “Passing a state law that forces counties to raise taxes on their citizens against their will is not the best way to address the issue.”
New Jersey does not feel the same way.
New Jersey legislators have done their constituents a great disservice by passing this bill. And now, the legislation is currently sitting on the desk of Governor Phil Murphy. It is expected that it will be signed any day now. This gives new life to the saying, “when it rains, it pours.”
About the Author
Brittany is a writer and editor for the Foundation for Economic Education. In addition to co-hosting FEE’s weekly podcast, she is also a co-host of Beltway Banthas, a podcast that combines Star Wars and politics. Brittany believes that the most effective way to promote individual liberty and free market economics is by telling timely stories that highlight timeless principles.
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