Christie’s proposed income tax cut wins instant business support

NJBIZ STAFF//January 17, 2012//

Christie’s proposed income tax cut wins instant business support

NJBIZ STAFF//January 17, 2012//

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A proposed 10 percent, across-the-board income tax cut proposed by Gov. Chris Christie won instant support from business groups today.

The proposal, made during Christie’s annual State of the State address, would be the largest tax cut in the state since the 30 percent cut enacted during Gov. Christine Todd Whitman‘s first term.

“In my budget, I will fulfill a promise I made to all the people of New Jersey in 2009 — real relief from the heavy personal income tax burden that has strangled our families and forced many to move away,” Christie said.

A 10 percent cut would lower New Jersey’s top tax rate from 8.97 percent to 8.073 percent, while the lowest rate would decrease from 1.4 percent to 1.26 percent. It would also reduce the highest rate below the 8.82 percent top rate recently passed in New York, although the state’s rate would remain 5 percentage points higher than Pennsylvania’s flat rate of 3.07 percent.

The cut would be phased in over three years, beginning in January 2013, according to Christie’s staff.

Laurie Ehlbeck, New Jersey director of the National Federation of Independent Business, said she heard calls from members expressing support for the proposal soon after the speech.

“They’re very excited because it’s more money in their pocket, more money that will go into growing their business and go back into the economy,” Ehlbeck said.

In statements, New Jersey Chamber of Commerce President Thomas A. Bracken described the proposal as “a bold, courageous initiative to help set us apart from our competitor states,” while New Jersey Business & Industry Association President Philip Kirschner said it “will boost the state’s economy and encourage businesses to expand and create jobs for New Jersey workers.”

Chamber of Commerce Southern New Jersey President Debra P. DiLorenzo credited previous efforts by Christie and the Legislature with laying the groundwork for a tax cut.

“His proposal to reduce the state income tax rate by 10 percent — equally and across the board, including for ‘job creators’ — is now possible because of the tough decisions that were made to reduce expenses,” she said in a statement.

While the cut would apply to the income tax, it would reduce the tax on business income for any business owner that reports business income as personal income, such as owners of limited liability corporations and sole proprietorships.

Opposition in Legislature

Senate President Stephen M. Sweeney (D-West Deptford) and Assembly Speaker Sheila Y. Oliver (D-East Orange) both expressed skepticism toward the proposal, saying it would be skewed toward millionaires and cut school aid.

“If you want to get serious, you got to stop trying to give bailouts to the multimillionaires in this state and start looking out for the middle class and the poor,” Sweeney said. He later asked the press to challenge Christie on what he called “this BS tax cut. It’s not real, it’s for the wealthy, and it would be nice if people would challenge him on it.”

Oliver said of the cut under Whitman: “one of the reasons that we are in the state we are in today is because that much revenue was taken out of our income stream.”

While the Democratic leaders expressed opposition, multiple Democrats from both houses joined the Republican-led standing ovation over the income tax cut. They included Sens. Brian P. Stack (D-West New York) and Jeff Van Drew (D-Cape May Court House).

Assembly Minority Leader Jon M. Bramnick (R-Westfield) expressed hope that Democrats would cross the partisan aisle for the proposal. “The reason the state got in trouble is because our taxes are too high,” he said.

Christie’s address was peppered with references to the upturn in the state’s economy. Among his comments:

– “Job growth has been restored — in the private sector, where we want it.”

– “Since our administration came into office, New Jersey has added over 60,000 new private sector jobs.”

– “We have changed the business environment in this state and, as a result, we are changing the jobs environment.”

Christie also cited numerous companies that have moved or invested in the state: Asurion, which establish its regional headquarters in Bridgewater; Allergan, which picked New Jersey for its Northeast research and development center; Watson Pharmaceuticals, which moved to Parsippany; Pinnacle Foods, which moved to Cherry Hill; Bayer HealthCare, which located its North America headquarters in Morris County; Novo Nordisk, in Middlesex County; and LG Electronics, in Bergen County.