Gov. Christie has decided to keep a decades-long agreement between New Jersey and Pennsylvania that allows residents to pay income tax where they live, regardless of where they work -- just months after he announced he would end it.
Christie said legislation passed Monday, among other recent measures, will help rein in health care costs for public employees, eliminating the need for the controversial tax policy change.
"By addressing a potential $250 million budget deficit from growing healthcare costs, we are now able to save an income tax reciprocity agreement with Pennsylvania that protects tens of thousands of hard working New Jerseyans from having to pay more income taxes."
Terminating the Reciprocal Personal Income Tax Agreement, reached in 1977, would have raised taxes for some New Jersey and Pennsylvania residents who commute across the Delaware River for work.
Christie had faced backlash from South Jersey-based businesses with employees who live in Philadelphia and surrounding suburbs. Employers such as Subaru said they were reconsidering multimillion dollar investments in New Jersey projects.
Debra P. DiLorenzo, president and CEO of the Chamber of Commerce Southern New Jersey, called Tuesday's announcement "a major victory for the business community."
Sweeney, joined by Assembly Majority Leader Lou Greenwald (D., Camden) and U.S. Rep. Donald Norcross (D., N.J.) at a news conference in West Deptford, noted the state had granted tax incentives to lure companies to Camden.
Gov. Wolf also opposed ending the agreement.
At the end of fiscal year 2016 in June, Christie, a Republican, blasted the Democratic-controlled Legislature for sending him what he described as an irresponsible budget that assumed $250 million in health-care savings without actually achieving them.
He responded in September by nixing the tax agreement.
About 250,000 Pennsylvania and New Jersey residents commute across the Delaware River for work, according to Census Bureau estimates.
The Christie administration expected the change, which was set to take effect Jan. 1, would generate $180 million in gross income tax revenues annually, according to a bond disclosure this month.
That's because of the difference in the two states' personal income tax structures, which lets high-income Pennsylvania residents working in the Garden State pay a relatively low tax.
Pennsylvania imposes a flat rate of 3.07 percent, while New Jersey's tax rate ranges from 1.4 percent for those earning $20,000 or less to 8.97 percent for those earning at least $500,000.
Lower-income South Jersey residents who work in Pennsylvania and file joint returns also would have paid more tax -- to Harrisburg, if they earned less than $113,000.