The Politics of the Budget: For Christie, Any Income Tax Cut Will Do

So what does Chris Christie really want?

The Republican governor started out in January calling for a 10 percent across-the-board income tax cut. The cut would mostly benefit the wealthy, but Christie defended it on the basis of economic competitiveness, arguing that it was needed to retain and attract "top earners and job creators" to New Jersey.

Then, less than two weeks ago, Christie agreed on a tax cut "compromise" with Senate President Stephen Sweeney (D-Gloucester) that essentially adopted Sweeney's plan to provide property tax credits of up to $1,000 on the income tax bills of those earning up to $400,000 -- without a penny going to the millionaire and multimillionaire "job creators" his original plan was designed to woo.

The Christie and Sweeney tax plans could not be more different in their goals and in the population they are designed to help, but in Christie's view, they were both "10 percent income tax cuts" and he said repeatedly that he was "delighted that Democrats were now debating which tax to cut."

Clearly, to Christie, any "10 percent income tax cut" will do -- as long as he can sign it into law by July in time for the Republican National Convention in Tampa this summer. And, as he said Wednesday, "if taxes do not get cut this year, it is the responsibility of one group of people and that is the legislative Democrats."

Whether the "legislative Democrats" will give Christie a tax cut he would be willing to sign is an open question.

First, there are really two groups of legislative Democrats. Pragmatists like Sweeney simply want to provide property tax relief and want to pass a bill they know Christie will sign. Progressives like Assembly Speaker Sheila Oliver (D-Essex) and Assembly Majority Leader Lou Greenwald (D-Camden) believe that a millionaire's tax should fairly be part of any property tax relief package, even if Christie will veto it.

In fact, some Democratic strategists believe that sending Christie off to Tampa empty-handed by forcing him to veto a tax cut that would benefit 98 percent of New Jerseyans and raise taxes on the wealthiest 2 percent would be the ideal political outcome.

Second, the admitted $676 million shortfall in Christie's "Jersey Comeback" -- and the potential $624 million additional gap identified by the Office of Legislative Services' David Rosen ("the Doctor Kevorkian of the numbers," as Christie calls him) -- provide justification for Democrats to take a wait-and-see approach on state revenue collections, with the intent of passing a compromise version of the Senate and Assembly Democratic tax cut plans by the end of December.

While Christie's income tax cut needs to kick in on July 1, the Sweeney and Greenwald plans would provide the same level of tax cut for the year through a checkoff on next April's income tax returns, and the Assembly "millionaire's tax" could just as easily take effect next January 1 as this July 1, so there is no need to pass their tax cut bills now.

Passing a tax cut five or six months from now could easily be defended as fiscally responsible. It would give Democrats additional time to sell their "millionaire's tax" while hammering Christie for proposing an income tax cut that would benefit the rich. And best of all for Democrats, it would deny Christie yet another victory lap going into the Republican National Convention.

In any case, Democratic sources said, the goal is to have the "legislative Democrats" agree on a strategy and a compromise tax cut proposal, rather than allowing Christie to divide the Democratic Party -- as the Christie-Sweeney tax cut deal threatened to do -- by pitting the pragmatic wing against the progressives once again heading into the 2013 gubernatorial and legislative elections.

The key is to be willing to shrug off the Christie public onslaught -- perhaps accompanied by a TV ad campaign financed by his 501c4 political action committee -- that will undoubtedly come if the Democratic-controlled Legislature fails to pass a tax cut by June 30. Democrats would have to adopt the attitude Greenwald expressed after Christie attacked "legislative Democrats" Wednesday: "If he stomps his feet, I feel the quake, but I don't shake."

Christie's insistent push for a multiyear income tax cut starting in July to go along with the multiyear business tax cuts that were approved by the Legislature last June is not proof that the Republican governor is angling for the vice presidential nomination to run with Mitt Romney in November. Nor is the expansive budget he proposed in February that included very aggressive revenue estimates, which are currently coming up short, and a broad array of new programs and initiatives designed to appeal to every constituency -- which is what governors usually do in their reelection years, not the year before, unless their eyes are on another election.

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