Christie Seeks 10% Income-Tax Cut for New Jersey Residents
January 20, 2012, 4:42 PM ESTBy Terrence Dopp
(Adds phase-in of proposal in fourth paragraph.)
Jan. 17 (Bloomberg) -- New Jersey Governor Chris Christie proposed reducing income-tax rates for every state resident by 10 percent to provide relief from the “burden that has strangled our families and forced many to move away.”
“Today, because we have put our fiscal house in order, we can budget for our priorities and give tax relief to all of our people,” Christie, a first-term Republican, said during his State of the State speech. “Tax relief that will lead to better lives for our citizens and more jobs for our state.”
Christie, 49, didn’t say how he would pay for the tax cut. The governor said the budget he submits next month “will be truly balanced,” and that the state needs to continue to “hold the line on spending.”
The tax cut would be phased in over three years, beginning in January 2013, according to a statement from Christie’s office. The new rates will make New Jersey more competitive and “lift the burden on small businesses and entrepreneurship,” Christie said.
Kevin Roberts, a spokesman for Christie, said the cost of the income-tax cut, and how the governor will pay for it, will be part of his budget address.
Christie also said he will seek to restore an earned income-tax credit for New Jersey’s working poor, which he said he was forced to cut in 2010 “when growth was gone and we had no money.” The reinstatement would take effect on Jan. 1, 2013.
California, New York
Christie’s budget for fiscal 2012, which ends June 30, forecast revenue from the income tax of $11.1 billion. A 10 percent cut of that amount would cost $1.1 billion.
While other states, including California and Illinois, are raising taxes, New Jersey is choosing “responsible tax cuts to give our overburdened citizens real relief,” Christie said.
Christie has twice vetoed measures sponsored by Democrats that would have raised income taxes on residents earning $1 million or more. Democrats control both houses of the Legislature.
If New Jersey enacted the tax overhaul put into law last month by New York Governor Andrew Cuomo, every person earning less than $100,000 a year would face a tax increase of 150 percent to 200 percent, while those earning more than $1 million would get a tax cut, Christie said.
“Is that what we want?” Christie said. “Is that fairness?”
Democratic Response
New Jersey’s income-tax rate ranges from 1.4 percent for those earning $20,000 a year or less, to 8.97 percent for those earning $500,000 or more, according to the treasury department.
Democratic lawmakers said Christie’s income-tax cut would favor the wealthy. While a person making $50,000 would get an $80 break under the governor’s plan, someone earning $1 million would save $7,200, said Assembly Speaker Sheila Oliver. a Democrat from East Orange.
“This sounds great,” Senate President Stephen Sweeney, a Democrat from West Deptford, told reporters after the speech. “It takes money out of one pocket and puts it in another.”
A year ago, Christie used his first State of the State speech to urge lawmakers to “do the big things,” which he said were maintaining fiscal discipline, overhauling public education and reducing the costs of pensions and benefits.
Education Overhaul
Christie, after calling 2011 “the year of education reform,” was unable to win passage of measures to offer privately funded vouchers to students from poor families, institute merit pay for teachers and make it easier for administrators to fire educators deemed to be inadequate. During today’s speech, Christie again urged lawmakers to pass those proposals, saying education was a top priority for 2012.
“These are not radical reforms; they are common sense,” Christie said. “They are not rash; they are long overdue.”
Christie said his third priority for 2012 is to “reclaim our inner cities, respond to underserved regions and engage our most vulnerable citizens.”
The governor asked lawmakers to amend the state’s bail laws to keep the most violent offenders off the streets, by keeping them in jail until their trials. At the same time, drug offenders who haven’t committed a violent crime should be given treatment, not prison, he said.
--Editors: Stacie Servetah, Pete Young
To contact the reporter on this story: Terrence Dopp in Trenton at tdopp@bloomberg.net
To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net
