New Jersey Governor Christie decides not to trash Pennsylvania tax pact

November 22, 2016 3:51 PM EST

New Jersey Governor Chris Christie departs after meeting with U.S. President-elect Donald Trump at Trump National Golf Club in Bedminster, New Jersey, U.S., November 20, 2016. REUTERS/Mike Segar


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By Hilary Russ

NEW YORK (Reuters) - New Jersey Governor Chris Christie on Tuesday said he would not scrap a long-standing income tax agreement with neighboring Pennsylvania that would have led to higher taxes for lower-income residents of southern New Jersey.

Christie said in September that he planned to throw out the 40-year-old "reciprocity" pact in order to raise future revenue, because New Jersey's Democrat-controlled legislature had not cut public employee health insurance costs in the state's fiscal 2017 budget.

The Republican governor said he reversed course after lawmakers sent him a bill, which he signed on Monday, to save $200 million by streamlining pharmacy benefits.

"I'm proud my administration was again able to work with elected officials from both sides of the aisle and many labor union representatives to achieve these savings," Christie said in a statement.

The arrangement lets residents of both states pay personal income taxes where they live, not where they work.

It is advantageous for high-income Pennsylvania residents who work in New Jersey, because they pay their state's lower tax rate. It is also good for low-income New Jerseyans who work across the border because of New Jersey's progressive tax system.

(Reporting by Hilary Russ; Editing by Leslie Adler)



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