New Jersey Gov. Chris Christie (R-NJ) announced a new plan to cut income taxes by 10 percent over three years during his State of the State address in January. Republicans are once again claiming that this will bring more jobs to the state, thus improving the local economy and ultimately bringing in more revenue to offset the lower rates. (The claim that lower tax rates increases revenue is not borne out by the facts.)
Christie has claimed that his plan is aimed at providing “across the board” tax relief. But as a new analysis of the proposal points out, those who will benefit most from the Governor’s plan would be the Garden State’s wealthiest residents, as its not income taxes, but property taxes that make up the bulk of the tax bill for Jersey’s middle-class:
A family earning $50,000 a year would save $80.50, and those making $100,000 would save $275, according to David Rosen, budget and finance officer with [the Office of Legislative Services]. Families who make $1 million would save $7,265, Rosen said.
The OLS analysis also examined a tax snapshot of 2004, the last time the Treasury Department married property and income tax payments by address. The data show that families in 2004 who made below $200,000 paid a greater share of their income toward property taxes than toward income taxes. For example, a family that makes $80,000 paid about 6 percent of its gross income for property taxes and about 1.6 for income taxes.
The opposite is true for the state’s wealthy, who pay a much higher income tax rate under the state’s progressive tax structure. A family that earned $500,000 in 2004 paid about 1.8 percent of its gross income for property taxes and 5 percent for income taxes.
The Newark Star-Ledger noted in an editorial that Christie’s plan “will primarily benefit New Jersey’s wealthiest class while doing little to ease the property tax burden on the middle class.” Already, according to the Institute on Taxation and Economic Policy (ITEC), New Jerseyans in the bottom 20 percent of earners — those making $12,400 on average — pay 10.7 percent of their overall income in taxes. Meanwhile, those in the top 1 percent — with an average income of $2,258,300 — pay 7.2 percent.
As Times of Trenton columnist George Amick noted, “it’s not the income tax that’s oppressing average New Jerseyans.” According to the ITEP data, property taxes in New Jersey are particularly regressive, while income tax rates are more progressive. Democrats have called for Christie to cut property taxes instead.
Christie’s plan is projected to cost the state $1.3 billion dollars by the time all of the cuts are phased in. In order to make up for that shortfall, some budget changes will have to be made, and if one of those changes is increasing property taxes, Christie’s plan could turn out to be even more regressive than it appears.