Gov. Chris Christie's decision to take a look at ending a 38-year-old agreement with Pennsylvania that allows New Jersey and Pennsylvania residents who work across the river to pay income taxes where they live has been met with outrage from South Jersey lawmakers who say New Jerseyans would end up paying more in taxes.
The governor's request to look at the agreement was rolled out in an executive order dealing with health care he issued last week. It was announced the same time he declared a state of emergency in New Jersey and directed transit officials to make a list of nonessential road projects to be shuttered.
The executive orders emerged after the state Senate refused to take up a funding plan for the state's depleted Transportation Trust Fund the governor hashed out with Assembly Speaker Vincent Prieto (D-Hudson).
Christie then instructed state officials to explore the consequences of withdrawing from that income tax pact with Pennsylvania.
It comes 12 years after former Gov. James E. McGreevey proposed to end the reciprocal tax agreement, but dropped the plan after angering south Jersey residents and lawmakers who said many New Jerseyans who worked in Pennsylvania would end up paying more in taxes.
"It's a retread of a bad idea," said Assemblyman Louis Greenwald (D-Camden), who represents constituents who would be affected by the proposal.
He dismissed it as a budget gimmick that could give the a state short-term boost to add to the budget, but which would do little in the end, Greenwald argued.
"Pennsylvania could reciprocate and do the same. It does not make sense," he said. "It's a calculation on the budget that buys (the governor) time, but it's not anything that's real or that can be counted."
Other South Jersey lawmakers echoed Greenwald's remarks.
"This was a bad idea in 2002 and it's still a bad idea today. It's the wrong policy because it is a tax increase on the income of working people who make their home in New Jersey but are employed in Pennsylvania, including the many New Jersey residents who work in Philadelphia," Senate President Stephen Sweeney (D-Gloucester) said.
"Since New Jersey's tax structure is more progressive, which means it is fairer to working people, the cross-state agreement also stands on the basic principle of paying taxes in your home state where taxpayers make use of public services," he said. "This idea should be scrapped without it being given any further consideration."
Currently, New Jersey doesn't collect income taxes from people living in Pennsylvania and working in New Jersey. Christie's former treasurer has estimated the Garden State would reap $180 million in revenue from Pennsylvania residents forced to pay taxes here.
The treasurer and attorney general, Christie said in an executive order, are to explore what it would take to pull out of the agreement and "prepare an estimate of the effects such a withdrawal would have on New Jersey's revenue collections."
Under the reciprocal agreement, a resident of New Jersey who works in Pennsylvania need only file a tax return in New Jersey. The same is true for a Pennsylvania resident working in New Jersey.