Dave Foster reports in the Trentonian:
In a decision that will most likely send shivers up the spines of many Pennsylvania residents working in New Jersey, Gov. Chris Christie has decided Friday to end the reciprocal tax agreement with his neighbor.
“Today’s action was made necessary by the legislature irresponsibly creating a $250 million state budget hole in June,” the Republican governor said in a statement. “They assumed public employee health insurance savings but did not give me the tools to make those savings real. I will not raise state taxes, cut property tax relief, reduce aid to education or our hospitals, or reduce the state’s record pension payment to cover for this blunder by the legislature.”
New Jersey Treasury informed Pennsylvania of the decision on Friday to end the agreement that has been in place since 1977.
What it means, come Jan. 1, many Pennsylvania residents working in New Jersey will end up paying more in income tax.
Currently, Pennsylvanians who work in New Jersey pay income taxes in their home state and vice versa for New Jersey residents.
With Christie’s decision, Pennsylvania employees working in New Jersey would have to pay the Garden State’s income tax rate, which fluctuates between 5.525 percent to 8.97 percent for those earning more than $40,000. Pennsylvania’s income tax is a steady 3.07 percent.
Christie’s stance will also hit low-income New Jersey residents working in Pennsylvania. Since New Jersey’s rates are lower than Pennsylvania’s at 1.75 percent for income from $20,000 to $35,000, the taxpayer would get a credit for taxes paid at home but then pay some fraction to Pennsylvania.
Assembly Majority Leader Louis Greenwald (D-Camden/Burlington) said Friday he was “extremely disappointed” with the governor’s decision.
“Ending this agreement will cost South Jersey residents working in Philadelphia, hurting families and raising taxes on hardworking individuals,” Greenwald said. “The governor’s decision to focus on turning a quick buck instead of finding sustainable solutions to our budget problems continues to hurt our state and our residents. New Jersey’s already high cost of living already causes residents to flee our state, it makes no sense to needlessly raise taxes on working families.”
In an attempt to sway Christie, Pennsylvania State Rep. Steve Santarsiero (D-Bucks) dropped off 3,516 petitions to the governor’s office on Wednesday afternoon urging Christie to keep in place New Jersey and Pennsylvania’s income tax agreement.
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