By Star-Ledger Staff
January 31, 2012
Gov. Chris Christie’s proposal to cut income taxes by 10 percent would provide only modest financial relief to middle-class families who are struggling more under the weight of their property taxes, according to analysis by the nonpartisan Office of Legislative Services.
The governor’s plan would largely benefit the state’s wealthier residents, who pay a significantly higher rate under the state’s current progressive tax system, and so they would see greater savings, the analysis shows.
Senate Democrats said the analysis provided evidence that Christie’s proposed tax cuts across the board would favor the rich and shortchange the middle class, and they indicated they had a counterproposal that would offer relief from income and property taxes.
“We all want to cut taxes, but we want to cut the right taxes in ways that help those most in need and that provides the most benefit to the economy,” said Senator Paul Sarlo (D-Bergen), chairman of the Senate Budget and Appropriations Committee, which conducted the first of many expected hearings Monday on the tax cut proposal.
Republicans on the committee accused Democrats of dismissing the governor’s proposal too quickly.
“Democrats cannot have a knee-jerk reaction,” State Sen. Kevin O’Toole (R-Essex) said. “History shows that it will create more income tax revenue, attract jobs and more opportunities.”
O’Toole noted that when former Gov. Christine Todd Whitman, also a Republican, cut income taxes in the 1990s, overall income tax revenue increased as the economy expanded, incomes rose and jobs were created.
Christie unveiled his plan to reduce taxes in his annual State of the State address earlier this month, and later noted the cuts would be phased in over three years, starting Jan. 1, 2013.
A family earning $50,000 a year would save $80.50, and those making $100,000 would save $275, according to David Rosen, budget and finance officer with OLS. Families who make $1 million would save $7,265, Rosen said.
The OLS analysis also examined a tax snapshot of 2004, the last time the Treasury Department married property and income tax payments by address.
The data show that families in 2004 who made below $200,000 paid a greater share of their income toward property taxes than toward income taxes. For example, a family that makes $80,000 paid about 6 percent of its gross income for property taxes and about 1.6 for income taxes.
The opposite is true for the state’s wealthy, who pay a much higher income tax rate under the state’s progressive tax structure. A family that earned $500,000 in 2004 paid about 1.8 percent of its gross income for property taxes and 5 percent for income taxes.