July 02, 2016
Fresh from his failure to raise New Jersey’s gas tax by 23 cents a gallon, Gov. Chris Christie is considering a new tax-raising gambit.
Philly.com reports Christie is considering withdrawing from an agreement that exempts residents who live in Pennsylvania but work in New Jersey from paying income taxes on their salaries and wages to the Garden State — and vice versa.
That would mean a tax hike for the nearly 100,000 New Jerseyans from Camden, Gloucester and Burlington counties who cross the Delaware to work in Pennsylvania.
About 20,000 Philadelphia residents work in New Jersey.
The proposal is included in an executive order that Christie signed Thursday night which places millions of dollars in reserve. The governor said it was a response to a spending proposal submitted by the Legislature, which is controlled by Democrats.
Related story: No vote on gas tax set in New Jersey Senate
The order directs his treasurer to "determine the specific steps that would be necessary to withdraw" from the reciprocal income tax agreement between New Jersey and Pennsylvania.
Philly.com said Senate President Stephen Sweeney (D., Gloucester), did not respond to a message seeking comment.
It is estimated that withdrawing would generate $180 million annually for New Jersey and a smaller amount for Pennsylvania.
Pennsylvania's income tax rate is a flat 3.07 percent. New Jersey's system, with six tiers, is progressive.
If Christie ends the agreement, wealthy Pennsylvanians who work in New Jersey would face a higher tax.
But many in South Jersey who work across the river would also pay more — to Pennsylvania.
That's because New Jersey has two tax brackets lower than Pennsylvania's flat rate for those making less than $35,000.
The agreement does not apply to Philadelphia's wage tax, which is 3.47 percent for nonresidents, meaning a New Jersey resident who works in the city can claim a credit for paying the tax.
But without reciprocity, a New Jersey resident who works in Philadelphia must file a Pennsylvania tax return, and the commonwealth does not allow a credit on the Philadelphia wage tax.
New Jersey and Pennsylvania entered into the reciprocity agreement in 1977.
To read the entire Philly.com story, click here.