Ending Income Tax Agreement Could Generate Millions for NJ

By Briana Vannozzi

The governor now has just under four months to decide if he’ll go through with his proposal to end the Jersey/Pennsylvania income tax agreement.

The former state treasurer estimates the deal could generate $180 million for the Garden State, but it’ll come at a cost.

“He said, ‘I will not raise taxes.’ Tell that to the 120,000 people that are going to be impacted directly because of what you did,” said Senate President Steve Sweeney.

Ending the four decades old deal means residents who work across state lines will have to pay income taxes where they live and where they work.

Pennsylvania has a flat 3.07 percent income tax rate. New Jersey’s is on a sliding scale from as low as 1.75 percent capping at 8.97 percent. What does that mean if you work over the border? You’ll have to file two tax returns and pay the difference for taxes owed in the state where you live from that paid in the state where you work. Got it?

“It’s so unfair. You’re talking about people making $100,000 or less going to be paying $1,000 a year more plus city wage taxes when he didn’t need to do this,” Sweeney said.

Sweeney says he’s angry he didn’t get a heads up from the governor. The reciprocal tax agreement will affect about a quarter of a million residents from both states — many in South Jersey. Many, low income.

“What we’re hearing from most families is that this would be a real hardship for them. They’ve set their family budget together based on a set of expectations and now suddenly the rules are being rewritten,” said Rep. Steve Santarsiero of Bucks County, Pa.

Santarsiero gathered 3,500 signatures from his side of the river to petition against the governor’s decision.

Has he met with Gov. Chris Christie or had communication with the office?

“We have not. We are going to reach out this week and arrange that meeting. We’re trying to get the Wolf administration involved on the Pennsylvania side as well just to further explain how this is going to impact Pennsylvania residents,” Santarsiero said.

“The only reason I’m doing that is because I have to. I have to come to a balanced budget. I was not going to cut aid to education, I wasn’t going to cut the pension payment and I was not going to cut aid to hospitals,” Christie said.

Christie today saying the fault lies with the Legislature who passed a budget with a $250 million hole. Democrats argue they came up with $100 million in health care plan savings.

“I told the Senate president and the speaker at the time, I said, ‘Guys, if you do that, you are not going to like the things I’m going to have to do in order to balance the budget,’” Christie said.

Is this just a bargaining chip to further negotiate the budget?

“Listen, he’s already gotten a lot of savings through the Joint Health Care Commission. They’ve been negotiating, they’ve already got a lot of savings there and I’m sure he could get more,” Sweeney said.

Party leaders from both states say they’re actively reaching out to the governor’s office for meetings. It’s not the first time this deal has been threatened, but they’re hopeful it will be the last.