Deal Reached on NJ Millionaire’s Tax

Governor Phil Murphy announced on Thursday that a deal has been reached with the leadership of the State Legislature for the passage of a millionaire’s tax, as well as rebates for homeowners, something the Governor has been pushing for, for a long time.  The new deal will take effect on October 1.

The Governor said the COVID-19 pandemic has left a staggering impact on the state’s economy and the middle class.  He added that the middle class needed “an extra push,” because so many have lost their jobs.  He says the time is right for the state’s wealthiest to sacrifice.  Murphy posted this message in an email blast on Thursday morning:

“When I first began my campaign for Governor, one of the key planks in our plan to make New Jersey stronger and fairer was to bring tax fairness to our state by instituting a millionaires tax. We never gave up, and today I announced an agreement with Senate President Sweeney, Speaker Coughlin, Assembly Budget Chair Pintor Marin, and Senate Budget Chair Sarlo to finally meet this goal and ensure that the highest earners in our state will soon be paying their fair share in taxes.

As I noted in my budget address just three weeks ago, we do not hold any grudge against those who have been successful in life. But, in this unprecedented time, when so many middle-class families and others have sacrificed a great deal, now is the time to ensure that the wealthiest among us do their part and simply pay their fair share — literally pennies on the top dollar earned. Frankly, that is a modest ask.

But, the impact is anything but modest. The revenues generated through the millionaires tax will allow us to do more for our schools, our communities, and our property taxpayers. It will allow us to undo years of tax inequities – inequities that have led to the point where many middle-class and lower-income families actually pay a larger percentage of their incomes in taxes than millionaires.

Of course, Republicans in Trenton are already railing against this most basic form of tax fairness and trotting out the same discredited talking points that have been used for decades to coddle the rich at the expense of everyone else. Trenton Republicans are showing where they stand, which is with the richest 1% of our population, those who have prospered while the wealth gap between them and the middle-class and working families has continued to increase every year. Frankly, it’s hardly a surprise. It’s clearer than ever that the party of Chris Christie will always defend the most powerful and put the burden on the middle class and those working hard to get there.

By moving forward with the millionaires tax, we are also showing everyone where we stand — for finally taking long overdue steps to build an economy that works for everyone in our state, not just those at the top or those with political connections.

I especially want to thank Senate President Steve Sweeney and Assembly Speaker Craig Coughlin for their continued partnership as New Jersey faces truly historic challenges. Together we have taken the bold steps necessary to deal with the crisis of today and to be better prepared for the challenges of tomorrow. It has been a long road to get to this moment, but I have never lost faith that with the support of grassroots advocates calling for change, we would get there together.”

Senate President Steve Sweeney said yesterday, “A lot of yous didn’t expect me to be here today.”  Following the Thursday announcement, the Governor’s Office issued the following press release:

Governor Murphy, Lt. Governor Oliver, Senate President Sweeney, Assembly Speaker Coughlin, Assembly Budget Chair Pintor Marin, and Senate Budget Chair Sarlo Announce Agreement to Include Millionaire’s Tax in Revised FY2021 Budget
Governor and Legislative Leaders Also Announce $500 Tax Rebate for Middle-Class Families
TRENTON – Governor Phil Murphy, Lieutenant Governor Sheila Oliver, Senate President Steve Sweeney, Assembly Speaker Craig Coughlin, Senate Budget Chair Paul Sarlo, and Assembly Budget Chair Eliana Pintor Marin today announced that that the revised Fiscal Year 2021 (FY2021) budget will raise the state’s gross income tax rate on income between $1 million and $5 million per year. The rate will increase from the current 8.97% to 10.75% for every dollar earned between $1 million and $5 million annually, bringing it in line with the rate for income earned over $5 million annually and back to the rate paid in 2010. The Governor and legislators also announced a tax cut that will pay an up to $500 rebate to approximately 800,000 New Jersey families. 
The enactment of a millionaire’s tax will further Governor Murphy’s longstanding commitment to making New Jersey stronger and fairer, an especially critical step given the financial realities exacerbated by the ongoing COVID-19 pandemic. 
Additionally, the Governor and Legislative leaders announced an up to $500 rebate for families with incomes under $150,000 per couple—or $75,000 for a single individual—with at least one dependent child. This rebate will be automatically distributed to eligible taxpayers in the summer of 2021, providing much-needed relief for middle-class families. 
“In this unprecedented time, when so many middle-class families and others have sacrificed a great deal, now is the time to ensure that the wealthiest among us are also called to make a modest sacrifice by paying pennies on the dollar more for any income over $1 million,” said Governor Murphy. “I am also proud to announce that we are taking the step of providing a $500 rebate for our middle-class families. I thank the Senate President and Speaker for their partnership as we move forward with these initiatives that will spur resiliency and economic growth in our state.”
“I would like to congratulate Governor Murphy, Senate President Sweeney, and Speaker Coughlin for coming together during a very difficult economic time in New Jersey and reaching consensus on a budget that will work for the operations of government, but more importantly for the people of New Jersey,” said Lieutenant Governor Oliver. “This is a budget that represents having to be frugal based on the revenue deficits we are challenged with, but at the same time, prioritizing what is important.”
“Helping middle class families to me, makes all the sense in the world at this time,” said Senate President Sweeney. “I want to thank the Governor and the Lieutenant Governor for their openness and their willingness to do this a little bit differently than we thought we were going to do. I am glad to be standing here with my colleagues.”
“The agreement that we reached will provide much needed tax relief for so many who can truly use a break,” said Assembly Speaker Coughlin. “It has always been a priority of all of us to help the middle class. I am pleased to join today with the Governor and the Senate President in support of increasing the tax rate on those earning more than a million dollars. The small increase has long been part of Governor Murphy’s plan of tax fairness and it will generate much needed revenue that will allow assistance to those desperately in need.”
“Many middle class families are really struggling because of what the pandemic has done to them,” said Assemblywoman Pintor Marin, Chair of the Assembly Budget Committee. “I applaud the Speaker for his leadership, the Governor, and Senate President for being at the forefront and giving families some of the relief that they have been looking for. I am very proud today.”
“What is important for all of us to recognize as we sit here today, during one of the most difficult times in our state and our country’s history is that the leaders have come together and have put together a budget process and put the biggest piece of it together in a time frame that allows it to be done in a transparent manner,” said Senator Sarlo, Chair of the Senate Budget Committee. “Thank you Governor, Senate President Sweeney, and Speaker Coughlin for taking the leadership on that.”
The Governor also announced that the definition of “dependent” in the state tax code will be changed to match the federal tax code.
The final revised FY2021 budget will be announced ahead of the September 30, 2020 deadline. It will take effect on October 1, 2020.
Obviously, not everyone is on board with the Governor’s Millionaire’s Tax announcement.

Former Assemblyman Jack Ciattarelli (R-District 16), who’s running for governor in 2021, panned the deal.

Ciattarelli
“Once again, Governor Murphy and his allies have failed the people of New Jersey,” said the Republican from Somerset County. “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.
“Moreover, telling middle-class New Jerseyans you are giving them a tax rebate after borrowing $4 billion that they’ll have to repay for thirty years, raising their gas taxes to 50 cents a gallon, and increasing their tolls by 36% is equal parts insulting and offensive. Frankly, it’s a dishonest bait and switch that proves this Governor will say or do anything to advance his tax, spend, and borrow agenda at the expense of our state’s future. We need to fix New Jersey and this budget deal is proof that Governor Murphy and Trenton Democrats are incapable of doing so.”
Assembly Minority Leader Jon Bramnick stated, “Governor Murphy’s plan to raise taxes is a gift for the Florida economy and a nightmare for New Jersey,” said Bramnick (R-Union). “Passing another ill-conceived tax will make outmigration worse and shift the tax burden onto the middle-class when others leave.”  A story by nj.com noted that the 10.75 percent tax on income over $1 million would increase taxes on a person earning $2 million by around $18,000 and a person earning $4 million would face a roughly $71,000 increase.  “If you had the choice to save thousands of dollars, wouldn’t you take it?” concluded Bramnick.
Tom Bracken, the President and CEO of the New Jersey Chamber of Commerce was also critical of the Governor’s announcement of a millionaire’s tax agreement
“Just what the most overtaxed state in the country needs. More taxes during an economic downturn.  The fiscal 2021 budget announcement by Governor Murphy and state legislative leaders clearly shows that again politics wins out over sound fiscal planning and management in Trenton.

This could not have been made any clearer than with the the Governor’s proposed millionaires tax. Instead of using a proposed tax to fill a revenue gap, the Governor announced that the tax would fund a maximum $500 per family tax rebate which essentially spends this new revenue and does nothing to alleviate the revenue gap in the budget.

It should be noted that the rebate for middle-class families will be more than negated by the added costs these families will face as New Jersey’s economy continues to limp along with no sound fiscal recovery plan, more taxes on businesses and job creators, no meaningful incentive programs for economic expansion and job growth, and a borrowing plan that will add even more cost burdens on taxpayers as interest payments come due.

Governor Murphy and Lt. Governor Oliver both said  that they want to help middle and working class families who are struggling.

What about New Jersey’s business owners and entrepreneurs who are struggling? Sooner or later this administration needs to realize that the business community is not a bottomless ATM machine. Our businesses are struggling to keep their doors open and their employees on payroll. They need help too.

The Governor again emphasized that the budget reflects his concept of a stronger and fairer New Jersey. We understand he sees the tax rebate as part of the fairer New Jersey but where is his plan for the stronger New Jersey?

Here is a suggestion: Accelerate the reopening of the economy which will create more jobs – that’s the best relief for our middle class and working families.”

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