Analysis
December 29th, 2015

Christie cut taxes but mostly vetoed tax increases in New Jersey


New Jersey Governor Chris Christie says he would significantly cut tax rates if he were elected president. Among other changes, he would lower the top federal individual income tax rate from 39.6 percent to 28 percent and the top corporate rate from 35 percent to 25 percent. While Christie was not able to enact as many tax cuts as he would have liked as governor, he did prevent tax increases from taking effect several times.

Christie has tried to cut New Jersey’s income and corporate tax since becoming governor in 2010. But his tax record is mostly one of vetoes because Democrats control both houses of the state legislature. In particular, Christie used his veto pen five times (in 2010, 2011, 2012, 2014, and 2015) to nix a so-called “millionaire’s tax”—a hike from 8.97 percent to 10.75 percent on income above $1 million. He also twice vetoed—in 2014 and 2015—a 15-percent surcharge on corporation business tax liabilities.

Christie

But while the legislature ignored his calls for across-the-board state income tax cuts, Christie did sign into law property tax and business tax relief. In 2010, New Jersey reduced its cap on property tax growth from 4 percent to 2 percent. His fiscal year 2013 budget provided $2.35 billion in “targeted” cuts for businesses, including a change in how the portion of multi-state business income taxable in New Jersey is calculated, a lower minimum tax on S-corporations, and a bigger state research and development credit.

During the most recent budget cycle, Christie finally succeeded in cutting individual income taxes for one group of New Jersey residents—low-income workers. The state expanded its earned income tax credit from 20 percent of the federal credit to 30 percent. “The legislature is preventing me from cutting taxes for everyone, but we’re now going to cut taxes for the working poor in this state,” Christie said when announcing the expanded credit. The governor had previously vetoed earned income tax credit expansions because the legislature would not pass broader income tax cuts.

Cross-posted on the Urban Institute’s Elevating the 2016 Debate blog.

Tracy Gordon contributed to this post.