One would think the Democratic legislature of New Jersey would be eager to pass a tax hike on millionaires now that the state has a Democratic governor. After all, they passed the hike five times during the tenure of Republican Chris Christie even though they knew he would veto it.
Gov. Phil Murphy has proposed “$1.7 billion in new taxes and other revenue to pay for public schools, public-employee pensions and other priorities.” His fellow Democrats have “balked” at this idea along with a rise in sales tax.
The governor and legislation must “agree on a balanced budget before July 1.” If that doesn’t happen, the government could shut down. That is something both sides want to avoid. Christie received a lot of criticism last year when the government shut down after he refused to sign the budget.
The legislature has a budget in pending that will “require the government to keep state parks, benches and forests open for seven seven days in the event of a government shutdown.”
From The Wall Street Journal:
State Senate President Steve Sweeney has been particularly vocal.“Everyone in Trenton is aware of the tax problems that we have here and that the state’s in a financial crisis,” Mr. Sweeney said in an interview. “Our goal is to come up with a solution that’s not all these taxes.”
Sweeney also said that the “state is taxed out” and that if anyone knows “anything about New Jersey, they’re just weary of taxes.”
Assembly Speaker Craig Coughlin said that he prefers the state not raise the sale tax even though he recognizes “that probably in each transaction it’s not a lot. But cumulatively, that’s a lot, and that affects people at all socioeconomic levels.”
Elaine Maag at the Tax Policy Center stated that candidates have an easy time gaining “popular support for the millionaire’s tax on the campaign trail, since most people wouldn’t be impacted by it.” But once they get into office, they encounter a pushback because those millionaires “tend to be very well politically connected and vocal.”
The Wall Street Journal detailed what Murphy wants and why Sweeney rejected it:
Mr. Murphy has proposed raising the state sales tax to 7% from 6.625%, which his administration estimates would generate about $597 million in new revenue. He also wants to impose a 10.75% state tax on income over $1 million, which his administration projects would bring in an additional $774 million in revenue for the state. The current top income-tax rate in New Jersey is 8.97% for income over $500,000.Mr. Sweeney previously voted for a millionaire’s tax, but said he changed his mind after the federal tax law was passed in December. The law capped previously unlimited annual state and local tax deductions at $10,000 for individual and married filers, and Mr. Sweeney said he is concerned an additional millionaire’s tax could drive people out of the state.“I think that people that have the ability to leave are leaving,” he said.
Sweeney prefers to raise the “top corporate income tax to 12% from 9%, but only on businesses earning more than $1 million annually.” He also put together “a legislative panel to review the state’s tax and fiscal policy.”
This could become tricky, though, since Murphy won the governorship by double digits in November and polls show that the millionaire’s tax has strong support in New Jersey. A Quinnipiac University poll in 2017 showed “that 74% of respondents backed a millionaire’s tax if the money went to public schools.”
Tom Moran has an op-ed at NJ.com about his one hour visit with the governor. In the meeting, Murphy said that “[W]e will reclaim the progressive soul of this state.” Moran believes that the state has “already seen the best of the Murphy era” and it can “get ugly fast.” He wrote:
Because all signs say the Legislature is going to murder his budget next month by refusing to raise the sales tax, leaving him a whopping $581 million short. Legislative leaders say that in public, and they emphasize it in private. And Murphy has built no reservoir of good will to fall back on.They don’t like him. They don’t fear him. And they are convinced he’s mistaken about the state’s progressive soul — at least when it comes to raising taxes.
Moran said that Sweeney “clenches his jaw when you mention Murphy’s name.”
Sweeney did admit that “[I]n fairness to Phil Murphy, he didn’t cause all these problems,” but he also believes that “he’s one of the people who can fix it.”
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