No Income Tax Increase This Year

The General Assembly failed to override Governor Christie’s veto of a tax increase on high-wage earners, ending chances a new top marginal tax rate of 10.75% will be part of this year’s budget.

The Institute has highlighted economic pitfalls associated with the tax increase. CSI-NJ notes that high-wage earners are the job creators needed to help grow the state’s economy. Analysis of 2007 income statistics shows that more than 40% of New Jerseyans earning more than $500,000 per year derived at least part of that income via business interests. Owners of S-corps or LLCs often file their business earnings as individual income. The correlation between earnings and business ownership grows stronger as one moves up the income ladder.

Once the General Assembly failed to override the governor’s veto, the Senate was precluded from attempting an override vote of their own.

The top marginal tax rate will remain at 8.97%, which was the level before a one-year “surcharge” on high wage earners was implemented in Governor Corzine’s final budget.