In an article published on November 16th, 2016, Philly.com writer Akira Suwa further detailed the consequences of the action taken by Governor Christie to withdraw from the PA-NJ reciprocal tax agreement. Suwa writes:
Commuters in New Jersey and Pennsylvania are bracing for a January wallet drain, the latest destructive act from Gov. Christie.
The swap allows people who work across state lines to pay income taxes at their home state’s tax rates. It encourages commerce and employment across state lines – essentials that have fallen off Christie’s agenda.
Christie’s tactic will hurt low-income New Jersey residents and high-income Pennsylvanians the most. New Jersey residents making between $20,000 and $35,000, with a tax rate in that state of up to 1.75 percent, may see their tax payments almost double if subjected to Pennsylvania’s 3.07 percent rate. Meanwhile, Pennsylvanians earning more than $500,000 could see their taxes nearly triple at New Jersey’s 8.97 percent rate.
The looming tax hike has infuriated important New Jersey employers, including Campbell Soup; Destination Maternity; and Subaru, which is threatening to put off an expansion.
Also true is that commuters who live in New Jersey and work in Philadelphia will end up paying more in taxes due to the fact that Pennsylvania law does not allow New Jersey residents to claim both New Jersey taxes and Philadelphia income taxes.
It is important to call the governor’s office and register your discontent with this plan which will go into effect on January 1st, 2017. New Jersey is already mismanaged enough to be one of the most expensive places to live, and South Jersey in particular will become even more expensive for people commuting to Philadelphia if this happens.
Call the governor’s office today at 609-292-6000. It’s easy and only takes a minute. The people answering the phones are very nice.
If you live in New Jersey and work in Pennsylvania, a tax benefit you’ve enjoyed for decades may be coming to an end. According to an article on WHYY’s Newsworks, New Jersey governor and former presidential hopeful Chris Christie recently “took the first step toward end a longstanding tax-reciprocity agreement with Pennsylvania, immediately drawing criticism from both sides of the Delaware River.” The reciprocal agreement makes it so that New Jersey residents don’t have their incomes taxed by both NJ and PA. By ending this agreement, Chris Christie will be doing something very un-Republican and subject your income to taxes from two states, and in doing so, he will be putting South Jersey at an incredible regional disadvantage for years to come.
The short story is that the Republican governor and Democrat-controlled legislature have been unable to figure out how to control healthcare costs for public employees, which is disappointing, because they’re adults, and adults should be able to do their jobs and come up with sensible legislation that doesn’t bankrupt the state. Sadly, that doesn’t seem to have happened. As the governor puts it: “I am left with the least painful option I have to fulfill my constitutional duty to balance the budget for New Jersey taxpayers.”
On the face of it, fiscal responsibility has never been Christie’s strong suit. He apparently doesn’t consider it his duty to fund transportation; construction was halted on most projects last month because he didn’t work with the legislature until it was too late to come up with a sensible solution both sides could live with. He’s done nothing of substance to deal with increasing property taxes, increasing pension debt, or increasing school taxes, either. If you thought that voting for a Republican for governor was going to bring fiscal responsibility to New Jersey, you were sadly mistaken.
But even beyond the political ineptitude and showmanship happening in Trenton, ending the NJ/PA reciprocal tax agreement will do serious harm to the commuting culture in South Jersey. Unlike North Jersey, with its towns close to prohibitively expensive New York acting as more affordable places to live for those who work in that city, South Jersey’s collection of bedroom communities is in a more fragile position. Looking at an NJ.com article titled “What are N.J.’s fastest growing and shrinking towns?”, you can see that the answer is “mostly not in South Jersey.” According to the data compiled by Stephen Stirling at the Star-Ledger and illustrated in the map below, most of the growing towns in the state are in its New York suburbs and that most South Jersey towns are losing people.
The greens towns are gaining population and the purple towns are losing population.
Philadelphia isn’t the economic powerhouse that New York is, and while plenty of people who work in Center City live in South Jersey, it’s a much lower number than those who live in North Jersey and commute into New York. And since Philadelphia’s economy isn’t as strong, there are fewer ancillary companies located in South Jersey that support Philadelphia industries. In fact, South Jersey’s industries haven’t been doing too well over the past several decades. We’re seeing the state legislature make tax deals with companies just to stop from moving out of state. And with several Atlantic City’s casinos closing, the economy down the shore isn’t doing too well, either.
Basically, providing commuters with good places to live is one of the only things South Jersey has going on at this point in its history. And compared to Pennsylvania, New Jersey’s property taxes are amazingly high. Towns in South Jersey might be more convenient to getting into Center City than a lot of towns on the PA side, but given enough economic disincentive to live on this side of the river, people are going to jump ship and move. Why live in a place where the property taxes are sky high *and* your income is double-taxed? There might be some nice towns to live in in South Jersey, but this is an unreasonable burden to put on people.
To sum it all up, Chris Christie might deal South Jersey a blow that could change the landscape for generations. By pricing people out of the state, he would be ensuring that our fiscal crises continue long after he’s left office. Our towns will keep losing people and less income tax will come in, straining budgets and services. It’s an incredibly irresponsible move by a man who’s had a very irresponsible governorship.
If you’re upset at the possibility of Christie damaging our region, please reach out to both he and your legislatures below. Politicians often act as if they operate in a vacuum, but they are ultimately responsible to us, the citizens of this state. Voicing our opposition to ludicrous ideas is the only thing we can do.
Contact your legislators by first selecting the town you live in and then filling out a correspondence form at http://www.njleg.state.nj.us/SelectMun.asp.
Contact Christie’s office directly at http://nj.gov/governor/contact/.