During his five years in office, New Jersey Gov. and now presidential candidate Chris Christie has consistently blocked progressive tax increases and sought to pass regressive and fiscally irresponsible tax cuts. The starkest example of how Gov. Christie has sought to make New Jersey’s tax code more unfair is that he consistently vetoed a small tax rate increase on millionaires but (conveniently until this week) refused to reverse his cuts to the state’s earned income tax credit (EITC). On the federal level, Gov. Christie has similarly laid out a broad tax cut plan that would heavily favor the wealthiest taxpayers while simultaneously slashing federal revenue.
Record as Governor of New Jersey
One of Gov. Christie’s very first actions as governor was vetoing the continuation of a temporary 2009 income tax increase on the state’s millionaires. The millionaire’s tax would have only affected the top 0.2 percent of New Jersey households and provided hundreds of millions in critically needed revenue as the state was still reeling from the recession.
Gov. Christie in 2010 pushed through a reduction in the state’s EITC from 25 to 20 percent of the federal credit. For all of Gov. Christie’s talk of the need for tax cuts, the reality is that his first year in office actually resulted in higher taxes for many of the state’s low- and middle-income families, while protecting the state’s wealthiest from paying a slightly higher tax rate.
It’s important to note that even with the millionaire’s tax, the state’s wealthiest residents would not have very much to complain about. The Institute on Taxation and Economic Policy (ITEP) calculated in 2015 that if the state were to restore the EITC to its previous level and reinstate the millionaire’s tax, the wealthiest 1 percent of taxpayers in the state would still pay a substantially lower state and local effective tax rate than the bottom 20 percent of taxpayers.
Worse, Gov. Christie also enacted a 2 percent cap on the growth of local property taxes. Like other property tax caps, Christie’s version severely limited the ability of local governments to raise enough revenue to provide basic public services. This limitation was especially harsh on local government because Christie also fought to cut state aid to them.
Beyond their effect on local government revenue, property tax caps are a poorly targeted way of providing tax breaks to individuals in need because wealthier taxpayers with better ability to pay also get a tax break. A better, targeted approach is the state’s property tax circuit breaker. Rather than expand the circuit breaker, Gov. Christie cut the rebates in half from 2011-2013. In addition, he delayed sending out rebates for nine months, choosing to prioritize other tax cuts instead.
Gov. Christie has attempted to pile on even more fiscally irresponsible and regressive tax breaks in recent years. He proposed a 10 percent across-the-board income tax cut, which would have cost the state billions and would have disproportionately benefited the wealthiest taxpayers. Gov. Christie tried to justify the cuts by relying on wildly unrealistic revenue projections, which assumed that New Jersey’s revenue growth rate would be nearly three times the national average.
Besides fighting for tax cuts on the personal side of the tax code, Gov. Christie has plowed a stunning $4 billion into tax subsidies for businesses in the state since the start of 2010. In contrast, the state awarded only $1.2 billion in subsidies during the entire previous decade. Despite investing so much more into tax subsidies, Gov. Christie recently vetoed commonsense legislation that would have required better scrutiny of the impact of his corporate tax break programs.
In 2010, Gov. Christie rejected $6 billion in federal funds for a critical transportation project to avoid paying just a third of the project’s cost. Two years ago, Gov. Christie privatized the state’s lottery system, promising that the move would pay substantial dividends for the state. Today, the gamble is already proving to be a revenue-losing dud, which should have been predictable given how unrealistic the projections were for how much the newly privatized lottery was supposed to realize.
To his credit, Gov. Christie reversed his position just this week on the state’s EITC and actually called for it to be raised to 30 percent of the federal EITC. The legislature quickly moved to pass this change, which will benefit an estimated 500,000 households in the state.
Gov. Christie’s Federal Tax Reform Plan
In the run-up to his official presidential announcement, Gov. Christie laid out his vision for federal tax reform in an op-ed in the Wall Street Journal. The plan follows in the footsteps of 2012 presidential candidate Mitt Romney’s tax reform proposal in that it calls for a dramatic drop in personal and corporate income tax rates without specifying how it would make up for the loss in revenue from the rate cuts. The only thing Gov. Christie says on this point is that breaks for charitable contributions and interest on home mortgages should be protected and that one potential approach would be to cap the total deductions and credits taxpayers can receive. A Citizens for Tax Justice (CTJ) analysis of Romney’s plan found that it would cut taxes for families making over a million dollars by an average of $250,000 annually and lacking more details from Gov. Christie, this is a pretty good proxy for the impact his plan would likely have.
In reviewing the proposal, CTJ’s Director Bob McIntyre noted that Gov. Christie’s plan “would almost certainly entail both a huge increase in the national debt and a huge increase in inequality.” Given Gov. Christie’s tax record in New Jersey, this should not be much of a surprise.