TRENTON - Democrats in the New Jersey Senate took their first look at Gov. Christie's plan to cut income taxes 10 percent, and the details they got from the Legislature's budget expert confirmed their suspicions: The higher a resident's income, the bigger their tax reduction would be.
The biggest winners, if Christie's proposal is enacted, would be the top 1.6 percent of taxpayers, who earn $500,000 or more, David Rosen, the Legislature's chief budget officer, told the Senate Budget Committee.
Treasurer Andrew Eristoff declined to testify at Monday's hearing.
"At a time when we should be doing anything and everything to spur the economy and to create jobs, a tax cut that disproportionately favors the wealthy appears to be the wrong thing to do," Sen. Paul Sarlo, a Bergen County Democrat, said at the start of the hearing.
Sarlo is chairman of the committee holding the hearing, leading Republicans on the panel to comment sarcastically about his open-mindedness on the issue.
Christie proposed a 10 percent across-the-board tax cut phased in over three years. The Republican governor is expected to announce details of the plan - including how to pay for it - in his budget address Feb. 21.
Democrats have reacted with skepticism, calling the proposal a giveaway to the wealthy at the expense of the middle class, and wondering aloud how the governor intends to make up for more than $1 billion in lost revenue. They have suggested cutting property taxes instead, which are the highest in the country, averaging $7,576 per household in 2010.
For the state's wealthiest residents, a 10 percent income-tax reduction could amount to thousands of dollars saved. A similar cut for low-income wage earners would not equal enough for a week's worth of groceries, Sarlo said.
In the first year of the plan, taxpayers with $50,000 in taxable income could expect to save about $27, while those with taxable incomes of $150,000 would save $184, and those with taxable incomes of $1 million would save $2,422, according to Rosen's figures. Those same taxpayers would save $81, $551, and $7,266 in the third year, respectively.
Questions also arose about how the governor planned to pay for the tax cut, which would cost $1.4 billion when the plan was fully phased in after three years.
Sarlo said lawmakers should be wary of digging the state too big a financial hole, saying that its obligation to the pension fund would top $2 billion a year by 2016 and that $1 billion or so would be needed to finance transportation projects through the Transportation Trust Fund.