Try again to seal up N.J.-Pa. income tax deal | Editorial

The Commodore Barry Bridge takes New Jersey commuters to Delaware County, Pa. An often-threatened bi-state agreement governs how much income tax they pay. (Garen Meguerian/Flickr Creative Commons)

There's no immediate threat to the reciprocal state income-tax deal that protects middle-class New Jersey residents who work in Pennsylvania, but there's disappointment around these parts that Gov. Phil Murphy has vetoed legislation that would have helped keep the two-state agreement in place.

Unfortunately, the bill may have fallen victim to the tit-for-tat, here's-mud-in your-eye, authority battle between Murphy and Senate President Stephen Sweeney, D-Gloucester, who represents lots of those middle-class workers in South Jersey's Third Legislative District.

The bill represented a sound principle, in our view. It would have barred a New Jersey governor from pulling the Garden State out of the bi-state agreement unilaterally. Governors of both parties -- but not Murphy, so far -- have proposed doing just that. Under the vetoed measure, such a change would need to be endorsed by the Legislature.

Governors keep trying this because statewide revenue numbers favor ending the reciprocal agreement, as former Gov. Chris Christie was ready to do in 2016. Income tax parameters for both states are complicated, but high-salary workers who live in Pennsylvania and toil in the Garden State (think of all of the health-care and financial services employers along the U.S. Route 1 corridor) would have to cough up more to Trenton if the deal were ended. Again, this is complex, but folks who live in big McMansions in Yardley or Middletown Township, Pa., would be subject to the higher end of New Jersey's graduated income tax rates, instead of the lower, flat rates they now pay under Pennsylvania law.

You can't blame our governors entirely for trying to tap a non-resident cash cow. Christie gave up his 2016 withdrawal effort after jawboning with Sweeney and other Pennsylvania-adjacent New Jersey lawmakers. But, a few years earlier,  former Democrat Gov. Jim McGreevey threatened the arrangement.

What Sweeney and others keep pointing out is the reverse effect that agreement withdrawal would have on New Jersey-domiciled workers -- most of whom are of more limited means -- who work in Philadelphia or its suburbs. They'd be subject to a flat Pennsylvania rate (3.07 percent) that's often higher than what they pay to Jersey. If it sounds like small potatoes, the state income tax bill paid by some lower/moderate wage Jersey-to-Pa. commuters could rise immediately by about $2,000 a year. An estimated 180,000 such workers would need to pay more, if not the whole $2,000.

This would be a serious blow to many who live in Burlington, Camden and Gloucester counties, as well as those residing across the Delaware River from Pennsylvania's Lehigh Valley.

You've got to like legislation (S-878) that allows the governor to request pulling the reciprocal plug if a sustained fiscal emergency warrants it, but requires the Legislature to sign off first. Maybe that's why the Senate voted 39-0, and the Assembly 76-0, in favor. You don't often get such bipartisan consensus on bills with a whiff of controversy. 

Murphy's veto on Aug. 27 was an absolute one, so Sweeney, Sen. Fred Madden, D-Gloucester, and a raft of Assembly sponsors will need to start from scratch to try to get a similar measure enacted. Go for it!

In fact, we would change hardly anything about the bill that Murphy rejected. Just bring it up for a vote when the state's two leading Trenton Democrats have stopped viewing every move to limit each other's power with utter contempt, as well as a personal slight. Heaven help New Jersey if that time never comes.

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