3 Tax Cut Plans, Zero Consensus [POLL]
He might have something there. Christie wants to slash incomes taxes by 10 percent across the board over three years. Senate Democrats are now pushing an alternative that would allow middle-class homeowners to take 10 percent of their property taxes as a direct income tax credit. Not to be outdone, Assembly Democrats have unveiled a 20 percent property tax relief credit for New Jersey's middle-class and lower-income homeowners.
In His Budget Address last month, Christie said, "In this budget, I have included the proposal I outlined for you a few weeks ago in the State of the State address. I propose to reduce personal income tax rates, across-the-board, for every New Jerseyan, by 10%, and I propose to begin the three-year phase-in of the cut with this budget. A 10% tax cut for every working New Jerseyan will help families to keep more of what they earn. It will make us more competitive with other states and attract more new jobs to New Jersey. Every New Jerseyan deserves a tax cut. Lower tax rates will relieve over- burdened middle class families. They will keep job creators here."
Democrats agree with Christie that the people of New Jersey want lower taxes. They just think he picked the wrong tax to cut. They feel the focus should be squarely on property taxes. They say the average Jersey resident would be lucky to see $100 in savings from the income tax cut plan while millionaires would receive over $7,000.
Yesterday, Townsquare Media reported exclusively that under a new plan proposed by State Senate President Steve Sweeney, a family earning $50,000 a year would save, on average $600, and a family earning $100,000 a year would save an average of $800; millionaires would get absolutely zero. Under the governor's proposed income tax scheme, a family earning $50,000 a year would only save $80.50, and a family earning $100,000 annually would only save $275, while a millionaire would get a $7,265.75 tax break and those earning $3 million would save $25,200 a year.
The Sweeney plan would focus every dollar of tax relief on the 95 percent of New Jersey households that earn up to $250,000. The Christie proposal, by comparison, would give those families only an average of $218 in relief, while the top 5 percent would get an average of $4,632 and the top 0.6% would get an average of $22,577.
"Property tax relief is on its way," says Sweeney. "Income tax cuts to the wealthy are not going to be had in this budget……I am not negotiating an income tax cut. I can tell you that right now."
Christie had a different take when he called into NJ 101.5 FM's Dennis and Judi Show yesterday. He said, "The Senate President has said that he wants an income tax credit program, I want an income tax cut program. That means, imagine this: in the state where these guys were running the state for the last eight years before I got here and they raised taxes and fees 115 times, the only argument we have left now down here on taxes is which ones to cut and how."
Sweeney responded by saying Christie is twisting things around. He explained, "The Governor might want to claim this is an income tax cut. It's not. It's a property tax cut (and) with my plan the people under $250,000 get all the money (with) his plan the majority of the money goes to people making more than $250,000."
"It's not about whether to cut income taxes, now it's just about how," explained Christie. "If I had told you this on Inauguration Day 2010 when I was staring at a $13 billion hole in our budget and I told you if we made tough choices we're going to get to this point, and that two years later we're here, you would have told me I was crazy."
Sweeney's plan would provide a property tax relief credit - through the gross income tax return - for all residential homeowners with incomes up to $250,000 in the amount of 10 percent of the first $10,000 in property taxes paid. He says the only way to get the credit is through income tax returns, but it is still based on how much people pay in property taxes.
A Third Plan
The Assembly Democrats have unveiled a plan of their own yesterday too. Their proposal would provide a property tax relief credit, also through the gross income tax return, for all residential homeowners with incomes up to $250,000 in the amount of 20 percent of the first $10,000 in property taxes paid.
"This is geared directly toward helping New Jersey's middle-class and lower-income families who have shouldered a heavy burden the last two years," says Assembly Speaker Sheila Oliver. "It focuses on our state's most painful and regressive tax and sends help where it's needed most - to New Jersey's working class families. It's a plan everybody should support to help New Jersey's middle-class and poor struggling to make ends meet and keep their homes."
To pay for the new revenue needed for the middle-class and lower-income property tax relief under the Assembly Democrats' plan, the state's income tax rate for those earning more than $1 million would be increased beginning next fiscal year. The rate would go from 8.97 percent to 10.75 percent. This would impact about 16,000 out of about 2.6 million filers and raise $800 million at the plan's full implementation in fiscal year 2016. And, that's where the problem lies because Christie hasn't been shy about his thoughts on that particular tax increase.
In his budget message, the Governor was clear on his position as it pertains to a millionaires' tax increase. He said, "Our standing in the last two years has improved somewhat - but not enough. We have stopped spending growth in its tracks. We have eliminated the special surtax that for a time gave New Jersey the highest marginal tax rate in the nation - and I am proud to have twice vetoed the effort to re-introduce it. And just so there is no mistake in my intention: I will veto any tax increase again."
Assembly Majority Leader Lou Greenwald is undeterred by Christie's comments. He says, "Over 70 percent of the state supports the millionaires tax…….The Governor isn't always wrong, but when he is wrong I'm not going to not act and not follow the beliefs of my party and myself just because he's in disagreement."
The Assembly Democrats' plan would be phased-in over four years - just as the Governor's plan - but relief would begin immediately, with the first year providing a credit of 20 percent of the first $5,000 in property taxes paid. Under the plan, there would be no statutory change to the existing property tax rebate/credit program, but homeowners qualifying for the property tax relief credit would receive the larger of the two. The Senior Freeze property tax relief program would remain in place.
"The evidence is clear that Governor Christie's proposed income tax scheme would benefit the rich far more than New Jersey's middle-class, but our plan steers us back in the right direction and provides help against the tax that burdens working families the most," explains Greenwald. "We're providing help to our middle-class families who have suffered while Governor Christie protected tax cuts to the wealthy, and we're targeting the pain eating away at our state - the property tax. This is a plan everyone should rally behind on behalf of our middle-class."
Courtesy Governor's Office