New Jersey Democrats are seizing on a new report that shows tax collections are down to oppose a tax cut compromise offered by Governor Chris Christie and one of the own, Senate President Stephen Sweeney.
Christie is backing down from his initial proposal to give tax cuts to the wealthy in favor of a compromise with the Democratic leader to cut property taxes by 10 percent for those who earns up to $400,000 a year.
But Democrats aren’t sold on the plan. A report issued Tuesday showed major tax revenues were below the governor’s predicted growth of 4.8 percent and were growing at half the rate necessary to reach his target projection. Corporation business tax collections fell sharply in April, down $85 million or 15.6 percent from April 2011. Gross income tax returns fell 1.2 percent compared to April 2011.
“This is further confirmation that the Governor’s proposed budget for next year is based on shaky figures, at best,” Assembly Budget Committee Chair Vincent Prieto (D-Hudson/Bergen) said.
Democrats argue the report is evidence that Christie’s tax plans aren’t sustainable, and prefer a proposal that doesn’t extend the cuts to high-income earners and gives relief to seniors.
“These numbers are cause for concern,” said Assembly Speaker Sheila Oliver (D-Essex/Passaic). “We must move forward responsibly, and that means doing so with a reliable property tax relief plan premised on economic fairness and significant help for the middle-class and senior and disabled citizens.”
Under Christie’s original proposal, those who earn between $50,000 and $100,000 a year would, on average, would save $212. New Jersey residents who earn more than $500,000 a year would save $4,085 on their income taxes, according to a report by the bipartisan Legislative Services Office.
Sweeney initially proposed to cut property taxes by 10 percent for anyone who earns less than $250,000 a year. In the compromise with Christie, he has agreed to extend the tax cut to those with incomes up to $400,000.
David Rosen, budget analyst for the Legislative Services Office, describes a property tax as a “flatter” tax, meaning there is less variation between people with middle and high incomes. Therefore, Rosen says, a property tax cut provides more tax relief to the middle class.
Associated Press contributed reporting.