STATE – Gov. Jon Corzine’s draconian budget proposal has drawn a lot of criticism, but the most controversial component was the plan to eliminate the property tax deduction on the state income tax for most New Jersey residents.
Realizing that his budget had little chance of passing with that proposal intact, last week the Governor announced that he’d restore the tax deduction for residents earning less than $150,000 per year.
“Given the circumstances, allowing people to maintain their property-tax deduction is the right thing to do and will help ease the pain for those being squeezed the most,” Senate President Richard J. Codey (D-Essex) said.
Assembly Speaker Joseph Roberts Jr. (D-Camden) added “preserving property tax relief for working families has always been our shared goal.”
The governor’s original budget proposal would have eliminated the income tax deduction for everyone but senior citizens and disabled residents. Middle class taxpayers would have been hit with a double whammy, since Corzine’s proposal also calls for the elimination of property tax rebates for households earning more than $75,000 a year.
To raise the revenue needed for his budget plan, Corzine proposed raising the income tax on New Jersey residents making $500,000 or more per year. They currently pay 8.97 percent of their income to the state; Corzine would increase the top tax rate to 10.25 percent – for one year only, he said.
State Sen. Kevin O’Toole (R-Essex) said the decision to hike the income tax further “is just absolutely, completely devastating. Clearly, he was seeing the public outrage on the elimination of the property tax deduction.”
New Jersey has the highest property taxes in the nation, currently averaging more than $7,000.
In 2006, homeowners saved an average of $300 because of the income tax deduction, according to the nonpartisan Office of Legislative Services.