Gov. Phil Murphy has been spending a good deal of time in Hudson County recently.
The hot topic?
Murphy is steadfast in his proposed millionaire’s tax, which would increase the annual income tax levy for those who earn more than a million dollars from 8.97 percent to 10.75 percent.
Last year, that hike was enacted for those whose yearly income was $5 million or more, but legislative support for an identical hike to benefit those with incomes of more than $1 million is lackluster.
At a round table discussion with several municipal leaders in Hudson County at Union City’s Albio Sires Elementary School, Gov. Murphy fell just short of declaring that he’d veto the $38.6 billion budget, describing his proposed tax hike as a “line in the sand.” He said that planned expenditures are contingent on the tax hike, which he called a matter of fairness.
On May 31, all three legislators from the state’s 33rd district, which represents portions of North Hudson, came out in support of the millionaire’s tax: “We are supportive of Governor Murphy’s proposal for a millionaire’s tax in this year’s budget, and we thank him for his commitment to working families in New Jersey.” The statement was released by Senator Brian Stack and Assembly members Annette Chaparro and Raj Mukherji.
In District 31, which represents Bayonne and most of Jersey City, Assembly members Nicholas Chiaravalloti and Angela McKnight withheld comment.
“Out of respect for Speaker Coughlin, Assembly Budget Committee chairperson Pintor Marin, and the legislative process, we did not feel a comment on the millionaire’s tax was necessary before June,” Chiaravalloti and McKnight said in a joint statement. “We are willing to support a millionaires tax if posted; however we know that we do not have the necessary votes in our caucus. We will continue to work with Speaker Coughlin in support of a budget that supports middle-class priorities and is fiscally responsible for all New Jerseyans.”
In the 32nd legislative district, lawmakers haven’t confirmed how they’ll vote on the tax hike.
While he doesn’t have a vote in the matter, County Executive Tom DeGise announced his enthusiastic support of the millionaire’s tax.
According to projections, the millionaire’s tax would raise about $447 million from some 18-19,000 New Jersey residents. According to Gov. Murphy’s plan, $200 million would be allocated to public schools. The rest would go toward avoiding fare hikes for NJ Transit commuters, boosting the state’s pension payments, and supplementing state preschool programs and tuition-free community college plans.
According to state senators, the hike is 17 votes short of passing in the senate. Stack is one of only four senators who came out in support of the hike ahead of the deadline, along with Senators Shirley Turner (D-Mercer), Ronald Rice (D-Essex) and Richard Codey (D-Essex).
Nine assembly members have endorsed the hike, including those mentioned above. In order to pass, 41 assembly members would have to approve.
‘Cut benefits first, reform taxes later’
Opponents, such as Senate President Steve Sweeney (D-Cumberland, Gloucester, Salem) and Assembly Speaker Craig Coughlin (D-Middlesex), claim that the state would experience a mass exodus of wealthy residents, at rates even greater than they currently are. The state has a highly progressive income tax. New Jersey’s top three percent of earners make up about 40 percent of the state’s income tax revenue, according to the New Jersey Division of Taxation.
Instead of a tax hike, Sweeney has proposed rollbacks on both pensions and healthcare benefits for public workers at the state level, which labor unions and other progressive organizations oppose.
State surveys indicate that only about 5.5 thousand millionaires left the state in 2018, and there are more than a million millionaires currently living in New Jersey.
If the millionaire’s tax does prove to be a “line in the sand,” and Murphy doesn’t sign off on the budget, New Jersey residents can expect a government shutdown until compromise is reached.