New Jersey residents earning less than $150,000 pay lower income taxes than people in nearby states, including New York and Connecticut, while top earners pay a higher rate, Treasurer Andrew Sidamon-Eristoff said.
The state’s revenue is “volatile” because of its progressive income tax, which is more dependent on the highest earners, Sidamon-Eristoff said. That means New Jersey suffers more than other states during an economic slowdown and outperforms during a recovery, he said during a breakfast with business owners in Monroe.
Governor Chris Christie, 49, a first-term Republican, is banking on a 7.3 percent jump in revenue to fund a $32.1 billion budget in the year starting July 1 and his 10 percent income-tax cut for all residents. As a projected economic recovery takes hold, gains made by those earners paying more taxes will allow New Jersey to outpace its neighbors, Sidamon-Eristoff said.
Under New Jersey’s income-tax structure, which increases the rate as income rises, the top 1 percent of earners pay 38 percent of all taxes, Sidamon-Eristoff said. Those earning $1 million pay more than their neighbors, according to a chart provided by the treasurer’s office.
“We get huge swings as a result of the greater economy,” the treasurer said. “Because we are so progressive, it’s extremely volatile as a revenue base.”