The governor said it amounted to a "special tax break" for some residents.
TRENTON -- Gov. Chris Christie said Tuesday that a nearly four-decade old tax agreement with Pennsylvania has allowed wealthy residents from across the river to "game the system."
The governor has called for an end to that reciprocal tax agreement, which allows New Jerseyans and Pennsylvanians working across state lines to pay taxes where they live, rather than where they work.
Each state has about 120,000 residents who work in the other.
Terminating the deal is expected to bring in another $180 million annually in tax revenue to Trenton, and cost Harrisburg about $5 million a year. Christie announced earlier this month that he was withdrawing from the agreement in order to bring in revenue.
Higher income Pennsylvania residents working in New Jersey, which has a top rate of 8.97 percent, are likely to pay much more without the agreement in place. Pennsylvania has a flat 3.07 percent income tax rate.
How scrapping the tax deal could affect you
In an example provided by the nonpartisan Office of Legislative Services, Pennsylvanians earning $1 million a year in New Jersey will see their state income tax liability more than double from $30,500 to $72,658.
At the same time, many low- and middle-income New Jerseyans who commute to Pennsylvania will pay more.
New Jerseyans earning $80,000 at their Pennsylvania job would go from paying $1,645 to $2,440, according to OLS. The estimate doesn't take into account additional local income taxes owed if that individual worked, for instance, in Philadelphia.
Christie said Tuesday on his 101.5 "Ask the Governor" radio program that the reciprocal tax agreement was "not good policy" because it singled out one section of the state for "a special tax break."
"People across the state in north Jersey and coastal southern New Jersey could very well ask why do we have a tax compact with Pennsylvania, which allows wealthy people to work in New Jersey, to live in Bucks County, and to pay no income tax in New Jersey."
Even so, the governor said he was content to leave it alone.
"The only reason I had to do this is because the Legislature didn't balance the budget," Christie said. "If you're going to be angry about it, email (Senate President) Steve Sweeney and (Assembly Speaker) Vinnie Prieto, who put a phantom $250 million in savings in the budget for health care costs for public workers and then did not give me the ability to be able to achieve those."
The budget passed by the Legislature in June assumed the state would come up with $250 million in cuts to public worker health care but did not identify those savings or mandate them.
Christie had asked that the Legislature add language giving the state's health care committees a deadline to approve $250 million in health benefits savings. And if they didn't act, state officials would find those cuts for them.
"Either the Legislature comes back and gives me the tools to get the savings that they promised in their budget for health care, or the compact is gone," he said.
The governor also blamed New Jersey's largest teachers' union for standing in the way of cost reductions. Members of the New Jersey Education Association who sit on a committee overseeing public worker benefits refused to attend meetings to block votes on benefits changes.
The state took the representatives to court over their absences, but lost in its effort to force their attendance.
Samantha Marcus may be reached at smarcus@njadvancemedia.com. Follow her on Twitter @samanthamarcus. Find NJ.com Politics on Facebook.