New Jersey Republican legislators decried a plan by Gov. Phil Murphy adopted into the 2021 budget to hike taxes on the state’s wealthiest residents to bring relief to the middle class from the COVID-19 pandemic.
Under the plan announced Sept. 17, the state would increase the tax rate on income between $1 million and $5 million to 10.75% from 8.97%.
The tax increase is estimated to raise about $390 million, which would help provide a one-time $500 rebate check next summer for 800,000 middle class families , according to Murphy.
If approved by the state legislature on Sept. 30, New Jersey would be the first state in the country to address revenue shortfalls prompted by the coronavirus outbreak by increasing taxes on the wealthy.
Bad Economic Move
The GOP believes it will only force the state’s wealthy residents to flee.
Senate Republican Budget Officer Steven Oroho (R-24) called it “a bad economic move that will only dig the Garden State into a deeper financial hole over the long run.”
“Year after year, IRS data shows that New Jersey continues to lose significantly more taxable income from high wage earners leaving the state than it gains from those who are moving in from elsewhere,” Oroho said in a statement. “The Democrats’ tax deal will accelerate that trend, make our state’s finances more unstable, and ultimately drive taxes higher for everyone.”
Plan Is ‘Gift’ For Florida’s Economy
Assembly Minority Leader John Bramnick (R-21) said, it’ll be “a gift for the Florida economy and a nightmare for New Jersey.”
In a tweet, Bramnick added, “Florida will be sending the Governor a fruit basket with oranges as a thank you gift and we will be sending our citizens, jobs and major companies.”
“It’s a gimmick that proves what we have said all along – higher taxes aren’t necessary to balance the budget,” Assemblywoman Serena DiMaso (R-13) said in a statement. “Murphy said he needed to raise taxes because revenues were dropping, but now it’s to fund special rebates next year when he is running for re-election.”
$500 Rebate to Late
“People need much more than $500 to help them through tough financial times, and they shouldn’t have to wait until next summer,” continued DiMaso. “They need us to reopen our economy and save our business community. And they need us to pass broad reforms that help everyone, not further entice our top earners to relocate out of the state.”
Jack Ciattarelli, a former assemblyman who plans to run against Murphy in next year’s gubernatorial race, tweeted that the governor’s proposal “failed the people of New Jersey…we should not be raising taxes on anyone in a state that already pays the highest taxes and suffers from the worst rate of outmigration in the nation.”
By contrast, Murphy said he was calling for “pennies on their top dollars earned” that would help “undo years of tax inequities” in New Jersey.
While Murphy has been pushing to reinstate New Jersey’s millionaire’s tax since taking office in January 2018, the pandemic prompted him to double down on his call.
During the press conference announcing the agreement, Murphy said, “We do not hold any grudge at all at those who have been successful in life, but in this unprecedented time when so many middle-class families and others have sacrificed so much, now is the time to ensure that the wealthiest among us are also called to sacrifice.”
The $32.7 billion, nine-month state budget introduced by Democratic lawmakers Sept. 22 features the increased taxes on millionaires as well as those on corporations, boosts the state’s surplus to more than $2.5 billion and calls for $4.5 billion in borrowing to help close a revenue shortfall.
The spending plan restores a number of programs, including funding for school-based mental health services and subsidies paid to New Jersey’s hospitals for providing care to the uninsured. Among the items eliminated from Murphy’s proposed budget are taxes on cigarettes, boat purchases and limo ride, an increase in gun fees, the “baby bond” initiative and $311 million increase in school aid.