Yesterday, New Jersey Governor Chris Christie signed a $32.5 billion budget after vetoing $1.6 billion in proposed tax hikes. New Jersey taxpayers and business owners have something to celebrate since the Democrats do not hold the votes necessary to override the line-item vetoes.
The Democrat’s proposed income tax hike would have pushed the top tax bracket from 8.97% to 10.75%. The tax increase would have placed New Jersey as the third highest state income tax rate after only California and Hawaii. Not to be outdone, the proposed 15% corporate income tax surcharged would have crippled the “Jersey Comeback.”
The 800-pound gorilla in the room is this broken entitlement program which eats away at billions of taxpayer dollars a year. If Democrats want to show they are serious on closing future budget shortfalls they need to implement the pension reform Governor Christie is advocating for.
Democrats in the legislature sought to put a Band-Aid over the state pension’s open wound, and not a very good one at that. Hiking taxes across the board would have driven away even more residents and businesses. The last thing New Jersey needs is a flood of wealth and residents heading to Florida and Texas’ business friendly climates, where income taxes aren’t imposed.
Besides avoiding new and exorbitantly high corporate and income tax increases, New Jersey residents won’t see a 75% e-cigarette tax increase either. Instead, these vapor products will continue to be subjected to a much lower sales tax rate, a victory for small businesses, especially convenience stores.
With the start of the 2015 fiscal year, New Jersey residents can breathe a short sigh of relief. There still remains much work to be done. The state pension system’s long term underfunded liabilities require real reforms, not short-term revenue increases that would have long-term negative economic consequences. Democrats will have to work with Governor Christie to enact meaningful reform if New Jersey’s fiscal problems are ever to fully subside.
Photo Credit: Bob Jagendorf