Christie Seeks 10% Income-Tax Cut for New Jersey Residents

New Jersey Governor Chris Christie
New Jersey Governor Chris Christie. Photographer: Scott Eells/Bloomberg

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 would 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?”

Josh Vlasto, a spokesman for Cuomo, a first-term Democrat, didn’t immediately respond to a call and e-mail requesting comment on Christie’s speech.

Tax Rates

New Jersey’s income-tax rate ranges from 1.4 percent for residents earning $20,000 a year or less, to 8.97 percent for those earning $500,000 or more, according to the treasury department. The state had the seventh-highest state income-tax burden in a ranking of 2010 collections per capita by the Washington-based Tax Foundation.

Democratic lawmakers said Christie’s 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 is a B.S. tax cut,” Senate President Stephen Sweeney, a Democrat from West Deptford, told reporters after the speech. “This is another windfall for multi-millionaires at the expense of schools, because that’s where the money comes from when you cut taxes.”

Democrats said they will seek to protect lower and middle-class taxpayers. Millionaires are “a protected class” under Christie, Sweeney said.

Democrats Push Back

Sweeney and other Democratic leaders have vowed to fight harder against Christie, who is halfway through his first term with near-record approval ratings. Democrats’ 2012 priorities are passage of a so-called millionaire’s tax, same-sex marriage and an increase in the minimum wage, Sweeney and Oliver said.

Even with Democrats hardening their opposition, Christie has remained popular in New Jersey and with Republicans out of state. He had 56 percent approval among voters in a Nov. 16 Quinnipiac University poll and has been campaigning for presidential candidate Mitt Romney in Iowa and New Hampshire after spurning his own White House bid last year.

Christie, who was initially scheduled to make his State of the State address on Jan. 10, postponed the speech after Assembly Minority Leader Alex DeCroce collapsed and died in the Statehouse.

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

While Christie has won passage of measures to raise public workers’ costs for pensions and benefits and put a 2 percent cap on property-tax growth, other proposals, including an education overhaul and an end to employee payouts for unused sick time, have stalled.

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.

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