On July 14th, the IRS held a public hearing for the debt-equity rule (section 385 of the IRS code) that the Treasury Department proposed last April. The hearing, which had as many as 16 speakers from various industries,...
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- New Jersey Governor Amends Legislature’s Budget and Pus...
New Jersey Governor Amends Legislature’s Budget and Pushes for Tax Cuts
The Democrat-controlled New Jersey legislature passed a $31.7 billion budget early last week to which Governor Chris Christie (R) responded with a red pen. Not only did he alter numerous portions of their budget and cut $86 million from it, but also vetoed several additional bills that would increase spending by $275 million. Further, he criticized them for failing to include these additional spending bills within the budget itself. Christie has yet to act on the controversial millionaire tax proposal passed by the Senate and Assembly that would raise the top income tax rate from 8.97% to 10.75% and bring in $800 million in revenue.
In total, Christie’s cuts from the Democrats’ various proposals amount to $361 million. Opponents allege that the spending cuts and vetoes decreased funding “for items including increases in legal services for the poor and in college tuition aid for low income students.” Christie, however, noted that his vetoes are “not a comment on the merits of these legislative initiatives” but simply fiscal responsibility.
On Monday, after vetoing portions of the Democrat’s budget, Christie convened a special session to advocate for middle-class tax reform. In his address, he pointed out that the surplus he created could now be used for this purpose. Christie argued that legislative Democrats “used [his] revenue projections to spend on programs throughout the state” and prompted, “if my revenue projections were good enough for your spending, why are they not good enough for the people’s tax cut?” The governor had been criticized for what legislative Democrats thought were overly-optimistic revenue and growth projections. Their budget had reserved $183 million for property tax relief, stipulating that for this to be used, Governor Chris Christie must “[meet] his optimistic state revenue estimates by the end of the year.”
Although Christie originally advocated an increase in the state’s earned income tax credit (EITC), he conditionally vetoed the bill because it was not accompanied by a decrease in taxes. His new plan uses his cuts and the created surplus to finance “property tax cuts for any homeowner with a household income under $400,000” and for the EITC expansion.
Tax relief now rests in the hands of state legislators, who must choose to ignore or respond to the proposal made by the governor early this week. It is unclear what will happen next, although New Jersey legislators do have the ability to overrule the governor’s final budget, subject to a two-thirds majority. For a summary of the governor’s proposed tax plan in addition to those plans presented by the legislature, see our previous work on the subject.
More on New Jersey here.
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