Some people are beginning to believe Gov. Phil Murphy hasn’t met a tax he doesn’t love.
To be fair, the economic condition of the state hasn’t been in great shape for well over a decade, and some of those taxes Murphy proposes are designed to put the state back on solid economic footing.
But Murphy’s progressive agenda, as outlined during his campaign for governor, will cost a lot to implement, and for New Jersey – the second highest taxed state in the nation – this means even more taxes.
Seeking to balance the state budget leaves Murphy only two real choices: Increase revenues or cut services. His predecessor, Gov. Chris Christie, did the latter, often robbing the poor to protect the state’s rich from increases in taxes. Murphy has decided that increasing the revenues will do the trick.
Sports betting may provide some relief. But the recent U.S. Supreme Court decision legalizes it in every state, which means New Jersey will face the same issues that helped drive Atlantic City broke – fierce competition.
The other new revenue is expected to come from legalized recreational marijuana. But the legislation is stalled and might not see the light of day again until next year.
So Murphy may be forced to raise taxes in a year in the midterm elections, and Democrats hope to win seats formerly held by the GOP.
More taxes may not be a good thing for Democrats
The fact that people are overtaxed in New Jersey became obvious when the federal government implemented its new tax code and cut down property tax reductions from income tax to $10,000 or less. This outraged many property owners throughout the state who have seen property values skyrocketing over the last two decades. But it also made obvious to many just how overtaxed local residents are. Instead of cutting taxes to help these property owners, Murphy and the legislature introduced schemes to get around the federal restrictions.
Politically, the federal plan pushed through Congress by President Donald Trump and GOP did what historically Democrats should have done, fattened the paychecks of average workers. This is not just in New Jersey, but in many states critical to maintaining a GOP majority in the upcoming midterm elections.
Studies say elections depend more on economics than on social issues, especially in the six months prior to an election. This will likely be the case in November if not in New Jersey where several GOP House seats may be vulnerable, but in Pennsylvania and some of the Steel Belt states farther west.
Whether or not economics plays a role in GOP candidate Bob Hugin’s effort to unseat Democratic U.S. Sen. Robert Menendez remains to be seen.
Menendez is very vulnerable because of issues related to his being admonished by the Senate Ethics Committee earlier this year.
The positive GOP-driven economy could galvanize the GOP vote, while at the same time the increased tax burden being implemented by Democrat Murphy could discourage a strong Democratic turnout. Many Democratic voters – who are adamantly opposed to President Trump – may well hold their noses and vote for Menendez, just to keep the GOP from winning a key Senate seat.
Is Murphy modern day Robin Hood?
Murphy has positioned himself as a modern day Robin Hood, someone who will take from the rich to give to the poor. And one significant element in his tax plan is a millionaire’s tax.
There are an estimated 20,000 millionaires living in New Jersey. But a millionaire today isn’t what it used to be a decade ago.
As some residents in downtown Jersey City – who were victims of the recent property revaluation – found out, being a millionaire isn’t what it’s cracked up to be. Many became instant millionaires and got a hefty tax increase to prove it.
While Murphy has also proposed a corporate tax surcharge that will allow him to back off his original millionaires’ tax slightly, a tax increase to the state’s wealthiest is inevitable.
Murphy’s budget includes hidden taxes such as the increase for property sales on homes above $1 million. With escalating property values in parts of the state, this could be almost anyone not merely the illusive “filthy rich.”
Moves by State Senate President Stephen Sweeney to spread out state school aid around the state could also have a huge impact on Jersey City. In order to make up the difference in lost aid to Jersey City, Democratic legislators have decided to implement a payroll tax, modeled after one that exists in Newark. While Jersey City residents would likely be exempt from this, anyone else will find it less profitable to work here.
Murphy has also proposed restoring the 7 percent sales tax, which means it will be more expensive for people to shop in New Jersey.
Murphy is throwing a bone to the already over taxed property owners by offering to restore the homestead rebate program, but there will be strings attached.
One proposed hidden tax would be on short-term rentals such as those for summer. This means that people seeking to take a classic shore vacation will have to pay even more, when it is already cheaper to take a seven-day cruise to Bermuda than it is to get a bungalow in Seaside Heights in season.
Al Sullivan may be reached at asullivan@hudsonreporter.com.
