New Jersey Gov. Chris Christie (R) today formally announced his intention to implement a 10 percent cut in New Jersey’s income tax. “Lower tax rates will relieve over-burdened middle class families,” Christie said in his annual budget address.
However, the middle class is likely to hardly notice Christie’s cut, as it would give just $80 annually to a households making $50,000. In fact, according to New Jersey Policy Perspective, President Deborah Howlett, 40 percent of the benefit of Christie’s tax cut will go to the state’s richest 1 percent:
The recession blew a $2.5 billion hole in the state budget that has never been filled. Now, the governor wants to dig that hole even deeper with an irresponsible gimmick that only benefits the wealthiest 1 percent.
Proposing an income tax cut might be good politics, but it’s bad policy for most New Jerseyans.
For most of us, the governor’s proposed income tax cut will amount to $2 a week, which will be quickly eaten up by rising property taxes. Meanwhile, the top 1 percent will reap nearly 40 percent of the savings.
The state’s tab for this tax cut will ultimately be $1.1 billion, and that money has to come from somewhere. While the governor seems to think it will come from his pie-in-the-sky revenue projections, it’s hard to imagine the state’s stagnant economy will turn around quite so quickly.
Already, according to the Institute on Taxation and Economic Policy (ITEP), New Jerseyans in the bottom 20 percent of earners pay 10.7 percent of their overall income in taxes, whole, those in the top 1 percent — with an average income of $2,258,300 — pay 7.2 percent. Christie’s income tax plan certainly won’t add any progressiveness to the code, though it will help those at the very bottom of the income scale via an increased Earned Income Tax Credit.
As Blue Jersey’s Bill Orr noted, tax collections in the Garden State are already off $325 million through the first six months of the current year, so “the governor is in no position to arbitrarily call for a self-inflicted wound through deliberately reducing the State’s income stream.” Christie’s tax cut will cost about $1.3 billion when it is fully phased in in four years.