Who's happy about Christie's tax-reciprocity move? Anyone?
If you work in South Jersey and commute from Pennsylvania, or vice versa, you'll pay higher wage taxes in 2017.
If you work in South Jersey and commute from Pennsylvania, or vice versa, you'll pay higher wage taxes in 2017.
And South Jersey employers including Subaru, Campbell Soup Co., and Destination Maternity - the latter made a big splash moving from Philadelphia to New Jersey - are furious.
So furious, they're discussing putting million-dollar projects on hold.
Last month, Gov. Christie ended, effective Jan. 1, the Pennsylvania/New Jersey Reciprocal Income Tax Agreement that has been in place for nearly 40 years.
Thomas Doll, president and COO of Subaru of America, told the Inquirer he was "blindsided" and "very disappointed" by Christie's decision.
As a result, Doll said, Subaru is reevaluating the building of its national training center in Camden.
"Had we known about this, before our construction of headquarters and our national training center, we may have reached a different conclusion," he said. "It would have factored into whether we moved."
Campbell also fiercely opposes Christie's scrapping the tax reciprocity.
"More than 40 percent of our employees are Pennsylvania residents," Campbell spokesman Tom Hushen said. "So we strongly supported the reciprocity agreement; it serves both states well. We hope the governor overturns the decision."
The PA/NJ Reciprocal Income Tax Agreement was put in place in 1977 and allows New Jersey and Pennsylvania residents to pay income taxes in the state where they live, not where they work.
While Pennsylvania has a low, flat personal-income tax rate of 3.07 percent, New Jersey's ranges from 1.40 percent for incomes under $20,000 to 8.97 percent for incomes over $500,000 - nearly triple Pennsylvania's rate.
The agreement also allows Jersey residents who work in Philadelphia a tax credit against the city wage tax.
That's all going away.
New Jersey-based companies with employees who live in Philadelphia and the surrounding Pennsylvania suburbs will be at a huge disadvantage, according to Kathy Davis, president of the Chamber of Commerce of South Jersey.
Nearly 250,000 workers in both states will file income-tax returns in both states. About 125,000 Pennsylvania residents commute to New Jersey, and 125,000 make the reverse trip, according to Census Bureau estimates.
"We had no idea this was coming," said Doll, himself a Pennsylvania resident.
"For a company like ours, making an investment in Camden, one reason was proximity to Philadelphia and its western suburbs," he said. "We'd be able to attract good candidates supplementing our South Jersey workforce. Their state income taxes will increase significantly."
About 170 people cross the Ben Franklin Bridge every day out of Subaru's 700-person workforce in Camden, he said. "It's a big deal. Either we gross them up, which raises salary increases and creates inflation and higher costs," or don't recruit from Pennsylvania.
Subaru of America's 250,000-square-foot headquarters build-out is underway, Doll added, but "as for our national training center, we're evaluating our options until we learn definitively what's going to happen" with the tax reciprocity.
The Subaru headquarters and the separate 83,000-square-foot training facility are on the site of a former Sears store. The automaker broke ground last December.
Ronald Masciantonio, chief administrative officer for Destination Maternity in Moorestown, said of the reciprocity decision: "This factor could have really changed things."
The Garden State poached Destination Maternity in 2013; the publicly held company shifted its offices from Philadelphia for $40 million in tax credits.
"An advantage for us in recruiting was there's no difference tax-wise where you live," one reason that justified the move to New Jersey, Masciantonio added. "I have no doubt we'll lose people once they see their paychecks impacted in January."
Masciantonio said he even contacted Donald Trump's campaign, asking: "Did Trump actually support what Christie's doing? It's effectively a tax increase to close a budget gap. . . . I didn't get an answer."
Regular folks are worrying, as well.
"My husband is semiretired and I was hoping to work at least three more years," wrote a reader, Carla Pickard, who lives in South Jersey and commutes to work in Philadelphia, driving in and paying a daily $5 toll.
"Working is no longer profitable - because commuting expenses are high and soon to go higher with the new 23 cents-a-gallon gas tax increase and the added state tax," Pickard wrote.
215-854-2808@erinarvedlund