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Tax-cut debate erupts anew in Trenton

TRENTON - Republicans and Democrats in New Jersey are again sparring over tax cuts as Gov. Christie prepares to enter his second term with national scrutiny surrounding his expected presidential bid.

Gov. Christie (left) and State Sen. Thomas H. Kean Jr. Kean sees a contrast with New York's new mayor.
Gov. Christie (left) and State Sen. Thomas H. Kean Jr. Kean sees a contrast with New York's new mayor.Read more

TRENTON - Republicans and Democrats in New Jersey are again sparring over tax cuts as Gov. Christie prepares to enter his second term with national scrutiny surrounding his expected presidential bid.

At a panel discussion Tuesday hosted by the New Jersey Business and Industry Association, top lawmakers split along party lines on the prospect of a tax cut for New Jerseyans.

Reducing taxes, either through an income-tax cut or a credit tied to property tax bills, "begins to send a message across the state and across the nation that we're heading in another direction," said Assembly Minority Leader Jon Bramnick (R., Union).

Bramnick said that finding "a few hundred million dollars" to pay for the cut would be feasible within a $32.9 billion budget.

"I am convinced, if the governor says he can find the money, he'll find the money," Bramnick said.

Senate Minority Leader Thomas H. Kean Jr. (R., Union) also said that cutting taxes would "send a very important signal" - drawing a contrast with neighboring New York City, where Mayor-elect Bill de Blasio has proposed raising taxes on the wealthy.

Democrats, meanwhile, expressed skepticism over the state's ability to foot the bill.

"Obviously the problem is, how do we do it?" said Assembly Speaker-elect Vincent Prieto (D., Hudson), chairman of the Budget Committee, suggesting the state needs to focus instead on lowering property taxes.

Sen. Paul Sarlo (D., Bergen), chairman of the Budget Committee, said he "would love to sit here today and announce an income-tax cut."

"It feels good to say that," Sarlo said. But he brought up concerns about revenues.

As of October, according to the Treasury Department, revenues were $115 million below budget projections for that point in fiscal 2014, which began July 1.

Sarlo said it was "premature" to call for a cut. Among factors affecting the budget, he said, is that revenues from just-launched Internet gaming - projected in the budget to net $160 million this fiscal year - are still unknown.

Christie, who proposed a 10 percent across-the-board income tax cut last year and was blocked by Democrats, has not announced plans to reintroduce the cut in the next budget.

But one of his economic advisers, Robert Grady, last month told a gathering of economists that the state could afford it, the Associated Press reported.

Christie has also recently attacked Democrats - who control both houses of the Legislature - over the tax cut issue.

"The Democrats set up a false choice. The false choice is, the only way we can cut taxes is if revenue increases," Christie said last month on NJ101.5 FM's Ask the Governor program. "The way to do that, in my view, is lower taxes and lower regulation."

At a Statehouse news conference this month, Christie said Democrats focus on revenues "as if they're blind to the idea we can also make reductions on the spending side."

In an interview last month, Senate President Stephen Sweeney (D., Gloucester) said, "Right now, we can't afford" a tax cut.

"When the governor said, 'We'll find a way to pay for it' . . . not if we're taking millions of dollars out of education or for senior programs," Sweeney said.

Sweeney - who has proposed an income-tax credit plan tied to property-tax bills - said the state would be able to pay for a cut "if we grow our economy."

An economic analysis released Wednesday by Rutgers University found that New Jersey had recovered half of the jobs it lost during the recession, while the United States as a whole had recovered 83 percent of lost jobs.

An Office of Legislative Services analysis conducted last year found that a 10 percent income-tax cut phased in over three years would cost the state $150 million in the first fiscal year, escalating to an annual cost of $1.3 billion.

Christie said during his news conference that the state treasurer and his staff were working on the budget that he will introduce in February.

"What will be in there, or not in there, will be based upon analysis . . . and what I think is in the best interests of the people of this state," he said.

For Christie, who is predicted to run for president in 2016, cutting taxes is "certainly part of putting forth the kind of credentials that are prized in the Republican primary," said David Redlawsk, political science professor and director of the Eagleton Center for Public Interest Polling at Rutgers.

How Christie pitches a tax cut - whether to help the middle class or lure more businesses to the state - could shape an appeal to primary voters, said Cary Covington, a political scientist at the University of Iowa.

"The why is probably more important from a political perspective than the fact of the tax cut," he said.