Christie OK With Federal Proposal That Would Raise Taxes for Many in NJ
TOMS RIVER — Gov. Chris Christie said he doesn’t oppose a federal proposal to eliminate the state and local tax deduction Wednesday, the same day a report from a liberal think tank warned the tax plan would mean a tax hike for more than one-fourth of New Jersey taxpayers.
Christie said he can’t be against it now after supporting the elimination of the state and local tax deduction in 2015 and 2016 as a presidential candidate.
“I advocated for that when I ran for president, so I’d kind of be a hypocrite to say that I’m against it now,” Christie said, after an environmental event in Toms River.
The major deductions are home mortgage interest, state and local tax deduction and charitable deductions, Christie said, with the first two much larger than the charitable deduction.
“If you want to make significant tax reductions in this country and change the way our tax system works, which I think is necessary for the increase in our economy, you’ve got to figure out a way to pay for it,” Christie said. “And there are three major deductions. All the rest are minor.”
Christie said federal officials may be consider “an either/or situation” in which a taxpayer would either take a mortgage interest deduction or a state and local tax deduction.
“I’m confident that folks will come to an accommodation that in the end, net-net, will be good for New Jersey. We’re not there yet. But already you’re talking about a compromise of making a choice,” Christie said.
The potential elimination of the tax deductions is part of an overall plan that would also cut corporate taxes, end the estate tax, reduce the number of tax rates and lower them, in part through increasing the standard deduction.
The major-party gubernatorial candidates seeking to succeed Christie have expressed concern about eliminating the state and local tax deduction – with both Phil Murphy and Lt. Gov. Kim Guadagno saying it would be “a disaster” for New Jersey.
New Jersey Policy Perspective and the Institute on Taxation and Economic Policy said 26.4 percent of New Jersey taxpayers would see an average increase of $2,420 a year in federal taxes if the framework agreed to by Republican congressional leaders and the White House became law.
That’s the second-highest share in the country, behind Maryland.
“Make no mistake: this proposal is not tax ‘reform’ – not by a long shot,” said Sheila Reynertson, NJPP senior policy analyst. “It’s merely a package of huge tax cuts for those who are already doing well in this rigged economy: the very wealthy and large corporations.”
The analysis found that taxpayers with households of $78,000 or less would see tax cuts averaging 0.5 percent to 0.8 percent of their income, or $80 to $390.
Households with incomes between $77,800 and $138,100 would pay an average $140 more, while those between $138,100 and $328,700 would pay an average $1,160 more.
Wealthier households would see a tax cut, on average, averaging 2.3 percent of income, or $73,950, for the top 1 percent of households with incomes of $1.1 million or more, and around 1 percent of income for households between $328,700 and $1.1 million.
In all those income brackets, there are variations. A small number of low-income and millionaire households would experience a tax hike, and more than half of the upper-middle class households would see cuts averaging $1,370.
In all, the plan would lower New Jerseyans’ cumulative tax bill by nearly $3.8 billion. Most of that benefit would go to wealthiest taxpayers, who not only have more money but, under the graduated tax structure, pay a higher rate.