New Jersey Assembly Bill A1298

New Jersey 2022-2023 Regular Session

• Introduced: 1/11/22
• Refer: 1/11/22

Caption

Restricts authority to terminate reciprocal personal income tax agreements with other states.

Impact

The bill has the potential to maintain stability in personal income tax agreements, particularly with states like Pennsylvania, where many New Jersey residents earn income but primarily reside in New Jersey. By ensuring that any changes to these agreements require legislative approval, the bill could provide a safeguard against abrupt changes in tax policy that could impact individuals who cross state lines for work. The act's retroactive provisions to an earlier date aim to uphold the integrity of historical agreements, suggesting a legislative intention to provide clarity and continuity in tax policy.

Summary

Assembly Bill A1298 seeks to amend existing legislation regarding reciprocal personal income tax agreements that New Jersey holds with other states. Specifically, it restricts the authority of the Director of the Division of Taxation in the Department of the Treasury by requiring that the termination of any reciprocal personal income tax agreement must be enacted by a law passed by both the Legislature and the Governor. This means that the director can no longer unilaterally decide to terminate such agreements with other states without going through the legislative process.

Contention

However, the proposal may face opposition from those who argue that it imposes bureaucratic hurdles that could complicate tax administration. Critics might be concerned that adding a legislative requirement for termination could hinder the state’s ability to respond quickly to changing tax needs or conditions. Additionally, questions may arise regarding the legislative capacity and willingness to directly manage what could be considered administrative functions of the tax department, potentially leading to a tug-of-war between legislative oversight and executive authority.