After stumping on the trail for increased taxes on the wealthy, and pitching a tax hike on upper income brackets multiple times, the Garden State Governor finally gets his way. Assembly Speaker Craig Coughlin was crucial in securing the deal.
The agreed-upon deal will mean a 20% tax hike for New Jersey residents who earn between $1 million and $5 million. The budget deal will also keep the corporate business tax surcharge around at an even higher rate than before.
These massive tax hikes are bad for many reasons, not the least of which is the clear message they send to these taxpayers and businesses: You’re not welcome in New Jersey.
While there has been a lot of talk from Murphy and others about the pandemic creating the need for tax hikes, the money from the millionaire’s tax hike won’t go to cover any pandemic related gap. The state already got authority to borrow $10 billion and impose a property tax surcharge to cover it – AND revenues are returning faster and higher than Murphy claimed in his revised budget remarks.
(UPDATE) On the positive side, the deal reportedly does NOT include tax hikes on guns, cigarettes, boats, and car services. Given the tax hikes that will take place, however, there won’t be a celebration from Garden State taxpayers.
The state has the refusal of political leaders to show any semblance of spending discipline to blame. New Jersey has nearly $100 billion in unfunded pension liabilities, and another $100 billion unfunded health benefits, despite being one of the most taxes states in the nation.
With a new, higher millionaire’s tax, New Jersey will see even more people leaving. The state has lost over $41 billion in adjusted gross income over the past two decades, with the number one destination state being Florida (which has no income tax). The Garden State is one of the leading outmigration states year after year.
More high earners leaving means a dwindling tax base, and fewer jobs, all so Governor Murphy can make a short term money grab to put off needed tough decisions.
ATR has been closely monitoring, and opposing the variety of tax hikes Governor Murphy currently favors, including tax and fee hikes on firearms owners, and a financial transactions tax that could lead to the potential departure of various stock exchanges from the state.