New Jersey’s governor and Senate president are calling for new tax hikes.
At a speech celebrating his first 100 days in office, Gov. Phil Murphy told attendees at an April 25 Rutgers University speech he was committed to increasing taxes.
“We know the people of New Jersey are with us,” Murphy said. “We know they support ensuring that millionaires pay their fair share. We know they understand that investing in our state will take new revenues.
“Yes, the millionaire’s tax is the right thing to do so we can invest directly in our middle-class and working families and in our students,” Murphy said. “Yes, closing loopholes that help only the biggest companies and the billionaire hedge fund managers is the right thing to do to ensure tax fairness for our small businesses. Yes, undoing the costly gimmicks of the past and resetting the sales tax at 7 percent is the right thing to do.”
Murphy is proposing a 10.75 percent surcharge on individual and household annual incomes above $1 million, on top of the 8.97 percent rate currently levied. Murphy also proposes increasing the state’s sales tax rate from 6.62 percent to 7 percent.
In March, state Senate President Steve Sweeney (D-Gloucester) called for increasing the levy on business owners earning more than $1 million annually to 12 percent.
No state lawmaker have yet introduced a bill incorporating either proposal.
Sweeney’s suggested changes must be introduced by a member of the state Assembly, because tax legislation must originate in the lower chamber.
Murphy’s proposals can be included in the state’s budget bill, which has not yet been formally introduced.
Changing Tax Tune
Regina Egea, president of the Garden State Initiative, a non-partisan free-market research nonprofit organization, says Murphy’s proposed tax hikes are not what he promised the voters.
“His campaign was popular because the perception was that it was going to tax everybody but the middle class, but that isn’t how it turned out,” Egea said. “He does deliver on his promise to implement a millionaire’s tax, but the number two generator of revenue in his plan is the sales tax increase. Returning it to 7 percent ties us for the second highest sales tax in the country.”
New Jersey state Sen. Tom Kean Jr. (R-Union) says the proposed tax hikes would significantly increase the cost of government in the state, chasing out productive people.
“When you increase taxes by $2.7 billion, one year to the next, and increase spending by 8 percent, many people will say New Jersey will become even more unaffordable,” Kean said. “The Bergen Record said it best when they said the state budget proposal would increase taxes on everybody, every single citizen. More people may want to leave New Jersey because they’re finding it more and more unaffordable.”
Egea says the taxes would discourage people from relocating their businesses to the state and bringing new jobs.
“They’re going to hurt the economy of New Jersey,” Egea said. “Businesses are consciously investing in other states and moving operations there.”
Decades of Effects
Kean says his fellow lawmakers should start thinking about how to make New Jersey friendlier to business owners and other taxpayers.
“Before we start to propose increasing taxes by $2.7 billion, we should at first see where we can create some more efficiencies in spending,” Kean said. “We need to turn the corner where New Jersey’s focus is 10 years or 20 years into the future. Moving our corporate tax to the highest in the country sends a signal that ripples not only for this year but over the course of the next 20 years, when people are saying where they want to locate their headquarters.”