No sooner had the proposal for a 10 percent cut in income tax rates passed the Governor’s lips in his State of the State message last month than Democrats denounced it as a windfall for the rich, a pittance for the middle class, and a slap in the face for the poor and demanded a list of budget cuts to make up for the loss of revenue.
Since then, in speeches, news conferences and his ubiquitous town hall forums, Gov. Christie has dismissed the Democrats’ criticism, daring them to oppose his recommendation and run the risk of being depicted as the party which rejects tax cuts.
On Feb. 21, when he delivers his budget message to the Legislature, he’ll once again fend off his critics while detailing how he proposes to cover the revenue loss a tax reduction would bring.
Because the tax cut would be phased in over three years starting in 2013, its impact on the budget would be comparatively modest, not reaching its full $1 billion estimated cost until 2016. The Governor has argued the additional money in workers’ paychecks will aid economic growth and enhance creation of a business-friendly environment.
Democrats counter that the anticipated savings to middle income New Jerseyans are so inconsequential --- less than $100 a year for a person earning $50,000 --- that any boost to the economy would be barely noticeable. Millionaires, on the other hand, would enjoy a reduction of more than $7,000.
While the tax structure is certainly a factor when corporate decision makers mull over re-locating or expanding operations, it is but one of a number of equally significant considerations which play into the ultimate decision --- things like availability of a skilled workforce, a modern transportation network for ease of commuting and moving goods to market, energy and labor costs, available housing, the public education system, and the regulatory structure.
Democrats contend, moreover, that the Governor’s tax cutting fervor is misplaced, that it is New Jersey’s highest in the nation property taxes -- rather than the income tax -- that is the greatest hindrance to economic growth and job creation.
While the rate of growth in property taxes has slowed -- thanks in large measure to a lower and more restrictive cap on increases -- the actual dollar cost to homeowners continues to rise, having been neither reduced nor stabilized. It remains taxpayers’ highest concern.
In supporting the tax cut, Christie has emphasized its’ fairness; that is, every wage earner receives the same percentage reduction and the fact that the wealthy receive a greater share is merely a reflection of the fact that they pay a greater share. That’s how a progressive income tax system works.
The Governor and his Democratic critics in the Legislature have laid out their respective positions and in the early stages of discussion, they’ll stand by them.