Back in June, even with his state facing a $10 billion budget shortfall, Gov. Chris Christie (R-NJ) vetoed a tax increase for millionaires, deriding the proposal as a “cute idea” that “doesn’t work.” He then set about slashing New Jersey’s budget to ribbons, including cutting the Earned Income Tax Credit and homestead rebates to such an extent that he increased taxes on the middle class.
Now, Christie has a new plan for getting his state’s finances under control that involves raising the retirement age and cutting retirement benefits for public-sector workers, including ending cost-of-living adjustments for current retirees (which amounts to a benefits cut). But at the same time, Christie is ready to blow a new hole in his state’s budget, as he told Bloomberg Radio that he hopes to implement a cut in the state’s top marginal income tax rate in the next year or two:
“We’ve got to do that,” said Christie…“You can’t be competitive when your top marginal rate is three times your neighbor.”
The 9 percent top marginal tax rate in New Jersey only applies to those making $500,000 or more annually, and because it’s a marginal rate, it is only levied on income in excess of that amount. The median income in New Jersey is about $69,000, so someone subject to the highest rate is making about seven times more than the median household.
It’s understandable that Christie is making budget cuts to deal with the effects of the Great Recession (though I think he made some bad choices), and it also makes sense that he is looking to reform his state’s pension system, which is badly underfunded. But to do so while simultaneously cutting taxes for the state’s most well-off residents is the height of fiscal irresponsibility. The Newark Star-Ledger’s Editorial Board took Christie to task for the proposal on those grounds:
Think about those priorities. Middle-class families just lost their property tax rebates. Schools lost nearly $1 billion in funding, their biggest hit ever. Thousands of working poor families were closed out of health care programs. And our colleges and universities were whacked hard, forcing tuition hikes as the state scholarship programs run dry. The governor said those cuts were necessary because the state’s vaults were empty. He was the guy telling us to live within our means, to face hard realities. And now this — a tax cut that would blow a new hole in the budget.
The Gloucester County Times also weighed in, saying Christie “ought to suspend his supply-side tax policy freight train long enough to examine the consequences.” But with his proposal, Christie is simply confirming what we already knew: Republican concerns about deficits evaporate when they see an opportunity to cut taxes for the rich.