Christie Announces Middle Class Tax Cut [AUDIO]
Governor Christie has been quiet in recent months on the idea of a tax cut in New Jersey but today he will announce plans for a new middle class tax cut.
Christie has proposed in the past a 10-percent income tax cut over three years, but a deal with Senate President Sweeney fell through last year. The proposal Christie will make today not only revives the tax cut, but also restores the earned income tax credit.
The Governor talked about the proposal with New Jersey 101.5′s Jim Gearhart & Eric Scott.
The plan calls for increasing the state’s earned income tax credit to 25 percent of the federal level from the current 20 percent, where it’s been since Christie reduced it from 25 percent in 2010. But he also calls for implementing a bigger move aimed at the middle class and some higher earners.
At the end of a four-year phase-in, households earning up to $400,000 would receive an income tax credit equivalent to 10 percent of their property tax bill. The credits would be refundable and capped at $10,000.
Qualifying homeowners would get a $100 credit for the second half of 2013, then 4 percent of their property taxes next year, 8 percent in 2015 and 10 percent in 2016 and thereafter.
The governor also calls for gradually increasing the refund for renters — currently $50 — to $200 by 2015.
The conditional veto, which is essentially a call to action for lawmakers, does not lay the cost of the credit or what changes might be made to his budget proposal to accommodate it.
The nonpartisan Office of Legislative Services said this month that the state government could miss revenue estimates by $302 million in the budget year that ends June 30 and could be another $335 million short in the next fiscal year. The administration has said the state’s finances are in better shape than that.
Last year, Christie struck his budget deal with state Sen. President Stephen Sweeney, a Democrat who is his partner on many major initiatives and his sparring partner on others. Last week, Sweeney said publicly that he was open to a tax cut in the coming year, though one was not in the budget proposal Christie has put forth.
Christie’s new plan makes a few changes from the one he and Sweeney agreed to last year. For one, it would benefit higher-income households. Under last year’s plan, only households making up to $250,000 would have been eligible for the credit for homeowners.
The other major difference is a “circuit-breaker” provision that lets the Legislature scrap the cuts if they’re not affordable.
“This improves upon the bipartisan agreement we reached last year but was ultimately rejected by some legislators, who now have no reason to stand in the way of a responsible tax relief plan,” the governor says in the conditional veto.
The Associated Press contributed to this story.