Trenton’s twisted version of deal or no deal finally came to an end this past weekend, and New Jersey taxpayers lose big as expected with over $1 billion in tax hikes to fuel a big 8 percent year-to-year spending increase.
It doesn’t take a crystal ball to see that this will make the state even more unwelcoming, and unaffordable. New Jersey already has the worst overall business tax climate, the 3rd-highest state and local tax burden, along with the highest average property tax bill.
The final agreement hinged on a new increase in the millionaire’s tax that affects people making over $5 million, and an increase in the corporate business tax that is supposed to last four years and expire. Don’t head over to Atlantic City to bet on the state letting that revenue go.
The hiked millionaire’s tax is supposed to raise $280 million annually, and the business tax changes $800 million.
New Jerseyans will also pay more for sharing economy services. The tax on ridesharing (Uber & Lyft) ended up being higher than the initial proposal, coming it at 50-cents per-ride. These are taxes that will absolutely hit middle-class residents, and risk hurting drivers by limiting demand for rides. Vaping stores and customers will be pinched as well with a new $17 million tax on e-cigarettes.
New internet sales tax provisions were included as well to collect from out-of-state businesses in the wake of the Supreme Court’s Wayfair decision.
In the rush to pass budget bills over the weekend, and beat the June 30 end of the fiscal year deadline, lawmakers took some risks and may have made some sloppy mistakes.
Incredibly, this includes hitting health insurance companies with the new, higher business tax, which would drive up premiums for New Jersey residents.
Combined reporting for businesses was also included, which significantly changes how they report revenues for tax purposes. This could have unexpected repercussions, and was pushed through with an understanding that any issues would be fixed later, as Senate President Sweeney has promised a clean-up bill later in the year.
Governor Murphy and legislative leaders can brag about beating the budget deadline, but they did so with a big asterisk.
There is some good news. The Governor’s huge taxes and fees on firearms seem to have bit the dust, the bag tax did not make it, and there was no sales tax hike.
Still, negotiations between Governor Murphy and Democratic leadership in the legislature simply amounted to two wolves arguing about which sheep to eat for dinner. In the end it means families and businesses who already face some of the worst taxes in the nation will be squeezed for more, and the state will go further down the path of being totally unaffordable.