TRENTON, N.J. — Several New Jersey employers are livid over Republican Gov. Chris Christie’s decision to end a nearly 4-decade-old income tax agreement with Pennsylvania.
With thousands of residents in each state poised to have their tax burdens increase, employers on the New Jersey side of the Delaware River are debating whether they should put some million-dollar projects on hold, The Philadelphia Inquirer (http://bit.ly/2dEeW5m) reported.
Subaru of America President Thomas Doll said he was “blindsided” and “very disappointed” by the governor’s decision. Subaru is now re-evaluating the decision to build its national training center in Camden.
“Had we known about this, before our construction of headquarters and our national training center, we may have reached a different conclusion,” Doll said. “It would have factored into whether we moved.”
Companies based in New Jersey with employees who live in Philadelphia and its surrounding suburbs will be at a huge disadvantage, according to Kathy Davis, president of the Chamber of Commerce of South Jersey.
Estimates from the U.S. Census Bureau show approximately 125,000 Pennsylvania residents commute to New Jersey, and 125,000 workers make the reverse trip.
“More than 40 percent of our employees are Pennsylvania residents,” said Tom Hushen, spokesman for Camden-based Campbell Soup Co. “So we strongly supported the reciprocity agreement; it serves both states well. We hope the governor overturns the decision.”
The 1977 deal, called the Pennsylvania/New Jersey Reciprocal Income Tax Agreement, allowed residents of both states to pay income taxes where they live, not where they work. The agreement also provided a tax credit against the city wage tax for New Jersey residents who work in Philadelphia.
Pennsylvania has a flat personal-income tax rate of 3.07 percent, while New Jersey’s rate ranges from 1.4 percent for incomes under $20,000 to 8.97 percent for incomes over $500,000.
Information from: The Philadelphia Inquirer, http://www.inquirer.com