Are we wrong to NOT contribute to the party for my stepdaughter?

I do not think you are in the wrong at all. You are throwing her a party with you guys that will cost money, and you weren't invited to the party the mom is throwing, so why put money into something that you can't enjoy as well; yeah it is for the daughter but if she doesn't have the money to throw it herself she needs to tone it down. I wouldn't give her money for it.