CHRIS CHRISTIE

Christie proposes massive fed tax cut for biz, workers

Kala Kachmar
@NewsQuip
New Jersey Gov. Chris Christie takes questions last month during a town hall meeting in Londonderry, New Hampshire.

New Jersey Gov. Chris Christie unveiled a sweeping federal tax cut plan in New Hampshire Tuesday that some said was as a bid to resurrect his fading presidential campaign.

Christie supporters called the detailed plan a bold, Reagan-esque move, but some economists said his proposal was flawed and would likely end up hurting middle-class earners.

The proposal includes a plan to:

  • Reduce the corporate tax rate from 35 to 25 percent
  • Lower income taxes for all earners, including an 11 percent reduction for the nation's wealthiest
  • Give income tax breaks for people over 62 and under 21
  • Support building the Keystone Pipeline

"We must create a flatter, fairer, simpler tax code," Christie said during a speech Tuesday at the University of New Hampshire at Manchester. He asserted that his measures would accomplish this without growing the federal deficit.

Christie didn't specify how much taxes would be reduced for those earning less than $500,000, but for those who earn the least, the number would be in the "single digits."

Someone who currently earns $500,000 per year would have about $195,000 in income taxes taken out. Under the new plan, that figure would drop to $140,000.

Cuts at a cost

But the plan touted as "revenue neutral" means money would have to come from somewhere else.

That somewhere else would most likely be at the expense of certain income tax deductions, said Steven Pressman, a finance and economics professor at Monmouth University. Corporate and income taxes are two of the federal government's most significant sources of revenue.

"It would have to mean a cut in the property tax deduction, the mortgage tax deduction, or lots of cuts in deductions and credits for child care," Pressman said. "Not mentioning how we're going to make up for that money makes it sound good."

The middle- and upper-middle classes would be hurt by eliminating property and mortgage income tax deductions, Pressman said. The richest 1 percent of Americans typically don't have mortgages.

"It's always great to say you're going to cut taxes because it sounds wonderful, but there are fiscal implications for that," said Joel Naroff, an economist at Naroff Economic Advisers, an economic consulting firm in Pennsylvania. "You have one of three options to make up for the loss: You raise taxes to make up for the loss, you cut spending or you increase the deficit."

Pressman said he's uncertain how the tax cuts would impact the nation's $3.9 trillion budget.

Christie set forth his proposals in the state that hosts the nation's first presidential primary. In recent weeks, Christie has heightened his profile in the Granite State, but with little to show for the effort.

On Monday, a Saint Anselm College/Bloomberg Politics poll showed Christie trailing five other candidates in New Hampshire, with about 7 percent support.

The governor's proposing such a detailed plan is aimed at setting himself apart from the crowded GOP field and promoting himself as a serious candidate, said Geoffrey Skelley, a political analyst at the University of Virginia's Center for Politics.

"He's fallen down in the pecking order," Skelley said. "You think back to 2012 and there were people trying to get him to run. Now it seems like the bottom as fallen out on him."

Christie's comeback

But Skelley said it would be foolish for anyone at this point to write off Christie as a viable presidential candidate, even though his strategy is risky because it's easier to attack more specific policy initiatives. Also recently, Christie unveiled plans to reform federal entitlements, considered a risky move because programs such as Social Security are popular with voters.

"I think Christie and his campaign have decided that it's worth laying out these specific plans to get attention," Skelley said. "There are going to be aspects to these plans that are going to be attractive to different parts of the (party) base and donors – especially corporate donors."

New Jersey Assemblyman Declan O'Scanlon, R-Monmouth County, said it's too early in the process for the polls to matter, but any substantive, well-thought out proposal can demonstrate Christie is a serious candidate.

Assemblyman Declan O'Scanlon is calling for quick passage of a bill that would allow convicted offenders the right to seek DNA testing that has the potential to exonerate them of their crimes, even if they have already completed their prison terms.

O'Scanlon, one of the governor's biggest supporters, said Christie overcame huge odds with a Democrat-controlled Legislature in New Jersey to implement the state's pension benefits reforms and property tax caps.

"These were comprehensive, real solutions to the problems facing New Jersey state government," he said. "I'm not surprised at all that we're seeing the same at the federal level. He's a substantive guy, whether you agree or not with his solutions, at least they are real solutions."

Christie's solutions are similar to tax cuts made in the 1980s under President Ronald Reagan, a parallel noted by the governor, and in the early 2000s under President George W. Bush.

Naroff said there was a federal budget surplus until the Bush cuts were made in 2001, resulting in large budget deficits.

In the past, corporate tax cuts have served as opportunities for companies to cut wages and increase their profits even more, Pressman said.

"Salaries of the top 1 percent have gone through the roof while everyone else's salaries have stagnated," he said. "Average families, in the past 30 or 35 years, have done pretty badly. Median household income, adjusted for inflation, pretty much hasn't changed since the 1980s."