Gov. Chris Christie last week signaled he will end the income tax reciprocal agreement that New Jersey has shared with Pennsylvania for nearly 40 years.
To quickly recap: Under the agreement, Pennsylvania residents who work in New Jersey pay the Keystone State’s income taxes rather than the Garden State’s, and vice versa. That effectively costs New Jersey somewhere between $180 million and $250 million a year in forfeited collections, depending on which analysis you consider.
If you’re wondering why New Jersey has kept this on the books so long, the answer, of course, is South Jersey.
The powers that be lurking in Voorhees, West Deptford and so on have argued that many South Jerseyans hold lower-paying jobs in Pennsylvania, and the agreement benefits them, as they can pay New Jersey’s progressive income tax — a better deal than the flat 3.07 percent levied by Pennsylvania.
Effectively, that means New Jerseyans who don’t work in the Keystone State are subsidizing the small number of those that do — and, meanwhile, high-wage earners commuting in from eastern Pennsylvania avoid paying anything to New Jersey at all.
We feel for those who will be hit in some border areas, but the good of the entire state should come first.
And hey, while we’re at it, let’s talk about all the professionals living in northern and central New Jersey while holding down jobs in Manhattan. Those folks are paying income taxes to both New York City and state — a big bite regardless of what kind of salary they draw. If you suddenly expect Bill De Blasio to propose a plan to eliminate a gigantic source of revenue from the city’s coffers through such an agreement, we have a bridge to sell you.
We sympathize with anyone struggling to scratch out a living in high-cost New Jersey, whether they live in Carneys Point or Kearny. But we can’t support the kind of tax inequality Pennsylvania is perpetuating, nor the audacity of its governor to say its state will suffer for New Jersey’s partisan problems. Pennsylvania’s time would be better spent getting its own horribly outdated tax code in order, and Democrats opposing Christie on this one ought to think about how more accurate income tax collections could be spent lightening the load on all income earners who live here.