From the Record:
A pair of federal and state tax policy decisions could deliver a double whammy to New Jersey and its homeowners, a Wall Street credit-rating agency warned on Monday.
Just days after outgoing Gov. Chris Christie’s administration proclaimed that it was leaving New Jersey in good fiscal health, Moody’s said reductions in the state sales tax and federal tax reform signed at the end of the year could deliver punishing blows to the state’s finances.
The reduction in corporate and personal income taxes backed by congressional Republicans and signed into law by President Donald Trump could result in the average value of a New Jersey home dropping by 7.5 percent, Moody’s said in a report.
The tax reform limits federal deductions for state and local tax payments to $10,000, well below the average $17,850 deduction claimed by New Jersey taxpayers in 2015.
The loss of home values will leave New Jersey homeowners with less wealth and disposable income, depressing retail sales, Moody’s said.
On top of that, a Christie-backed reduction in the state sales rate that took effect Jan. 1 will cut $400 million from collections in the year ended June 30 and $500 million the following year, according to the rating agency’s report.