Last week, Governor Chris Christie came before New Jersey State Legislature and the New Jersey residents for his annual “State of the State” address. In it; he reflected on a lost friend (Assemblyman Alex DeCroce (R-26)), the past year, the mid point in his term, and the year ahead. As he did last year, he laid out three central bullet points to the year ahead. Education was featured on last year’s and this year’s main points. He tackled pensions and benefits for public employees and now prepares to make other major changes in the state. The first point he focused on last Tuesday was his proposed 10% income tax. A tax that, like many of Christie’s statements and proposals, is getting mixed reviews and responses.
The way Christie presents it, the state income taxes of all earners will be adjusted and affected over a three year period and feature a restoration of the earned income tax credit, which tends to assist poorer residents. For Christie,
“Every New Jerseyan will get a cut in taxes. The working poor. The struggling middle class. The new college graduates getting their first job. The senior citizens who have already retired. The single mom. The job creators. The parents trying to afford to send their son or daughter to college. Everyone made the sacrifice. Everyone will share in the benefit. An across the board tax cut is fair – every New Jersey taxpayer will benefit,” the Governor argued. “Every New Jerseyan’s rates will go down. Every New Jerseyan will see relief. This is exactly what I was talking about when I took office; that the tough choices would lead to the right ones.”
Like was the case with several key initiatives for Christie, he will need to sell enough Democrats in the State Legislature if he is get this through the legislative process.
For Assembly Speaker Sheila Oliver (D-34)
“At first glance it sounds great, but it takes $1 billion out of our revenue stream. We are not going to necessarily support an across-the-board 10 percent just so we get to the bottom of restoration of the earned income tax credit.”
Oliver had put forth a proposal of her own earlier in the day largely focused on the millionaire’s tax. Christie, like he did previously, shot it down. Oliver’s criticism is not unwarranted as many might wonder what a loss of $1 billion in revenue would do to the state’s budget and revenue.
Assembly Majority Leader Lou Greenwald (D-6) reinforced Oliver’s comments by expressing,
“It is an indication that this governor’s priorities have missed the mark. It is constantly on the backs of the poor and the middle class and a reward for the wealthy. Under this tax cut, middle-class families don’t save enough for a week’s worth of groceries, while millionaires save enough to go on an exotic vacation.”
Besides Oliver and Greenwald, Senate President Stephen Sweeney (D-3) and multiple Democrats voiced similar concerns with Christie’s proposal.
The loss of revenue and paying for the plan is not only on the minds of members of the State Legislature. David Rousseau, a state treasurer under previous Governor Jon Corzine, exclaimed;
“Right now, the major question is how’s he going to pay for it. When the governor releases his budget, people will then ask whether the income tax cut is worth it. But right now we are only dealing with half the equation.”
The details of the income tax plan continue to be vague and likely will not be clarified under next month when Christie must reveal his next budget outline.
Rousseau magnifies the importance of how the income tax will affect all income levels. If it comes across balanced and results in balanced tax breaks, then it becomes more meaningful. However, several Democrats are worried that this will only result in another tax cut for the rich and leave the middle class and poor not receiving their just share while helping fund the revenue given to millionaires and billionaires. That is a major reason why Oliver and others will continue to arise the millionaire’s tax as a way to generate revenue for the state while also safeguarding against middle to lower class workers from having to contribute more than need be when more well off have more flexibility with funds.
If approved, it will still take three years before the state will know if the tax is working and beneficial overall. It is hoped that the plan would lower the state’s current tax rate by nearly 1%.
It is going to be a long and heated debate over this issue compared to other ones mentioned by Christie during his address. As Brigid Harrison, a political scientist at Montclair State University, views Christie’s proposal;
“Democrats are now forced to choose between either cutting income taxes or facing the brunt of public opinion that the governor will use against them. I don’t think he’ll get 10 percent. But he’ll get something.”
Harrison offers a valid point. Christie has had to bend a bit on major legislation during his first two years. If he wants to project a major income tax reform like stated, he will likely end up adjusting parts of this in order to get South Jersey Democratic votes led by Sweeney in the state Senate and likely further adjustments in order for Oliver to seriously bring something to her caucus in the Assembly. Based on Christie’s budget, this issue has the potential to tear the two parties apart after some signs of trying to attempt bipartisan measures a bit more. This type of proposal follows Christie’s agenda and the public will likely begin to study the potential outcome and that will also contribute to how this type of reform pans out. Can this tax translate fairly to all economic levels? That might be the ultimate argument for or against it.