New Jersey is taking your gift cards(Read article summary)
A new law set to go into effect this year would allow the New Jersey Department of the Treasury to seize unused gift cards as "unclaimed property" after two years. The public outcry has been swift.
If you drive a car , I’ll tax the street.
If you try to sit , I’ll tax your seat.
If you get too cold , I’ll tax the heat.
If you take a walk , I’ll tax your feet.
. . . And if you don’t use your gift cards within two years, I’ll seize them all.
(With apologies to the Beatles)
Pursuant to a law passed two years ago, the New Jersey Department of the Treasury will soon compel sellers to obtain the ZIP code of every buyer of a gift card in order to enable the state to expropriate the value of the unused card as “unclaimed property” after two years. The law also applies to unused travelers’ checks and money orders in addition to gift cards
In 2011 the state seized $79 million of such “unclaimed property” under the law. There was huge outcry and a lawsuit quickly followed that resulted in an injunction against the collection of ZIP codes. But this injunction has just been lifted, although the case has not yet been resolved. American Express has responded by pulling its gift cards from pharmacies, supermarkets and convenience stores. Two third-party providers of gift cards to malls, convenience stores and grocery stores, Blackhawk Network and InComm, have followed Amex’s lead and announced that they will stop doing business in New Jersey in June. The reason is that it is impossible to ensure compliance with the ZIP code mandate when the cards are sold by other parties.
Unlike gift cards issued by retailers, network-branded cards like American Express and Visa gift cards have no expiration date, require no fees after purchase, and are acceptable in exchange virtually everywhere. They operate as what Mises would call “secondary media of exchange.” People therefore are willing to hold them for extended periods of time as (imperfect) substitutes for cash. Thus, based on the same reasoning, the state could declare that cash balances–in the form of currency and demand deposits–that an individual accumulates over a two year period are also “unclaimed property” and subject to seizure. Sound far-fetched? Well think again–the tax devouring politicians of New Jersey have already thought of that. The same law mandates that banks transfer to the state all funds in New Jersey resident accounts that have been “inactive” for more than two years. Of course you can appeal to the state to reclaim your “unclaimed property” but you must fill out a blizzard of forms and jump through bureaucratic hoops. Good luck with that.
But there is occasionally a silver lining to government’s never-ending effort to mulct the taxpayers of more and more of their income and wealth. Sometimes a law is so egregious and tyrannical that it causes the carefully fabricated curtain concealing the nature of government to momentarily fly back to reveal the greedy, money-grubbing little men frantically operating the levers of power for their own benefit. Then, the legitimacy of the state suddenly and magnificently dissolves and the public perceives government for what it is and always was: a band of thieves. This appears to be happening now in New Jersey, judging by the comments on the latest money grab. Here is a small sample:
“These criminals belong in jail.”
“Wow, you pay for a gift card, don’t use it then NJ comes along and claims your money. Isn’t that stealing?”
“This is insane… how can they possibly justify something like this?”
“What is the matter if someone uses their gift card in 10 years or 6 months? It is their money (gift card).”
“Yet another example of New Jersey’s big government stealing $$$$$ whenever and wherever it can.”