New Jersey Governor Phil Murphy (D) speaks at the Coronavirus press briefing in Trenton, New Jersey.
Michael Brochstein | Barcroft Media | Getty Images
New Jersey Gov. Phil Murphy said on Thursday that he had struck a deal with state lawmakers to hike taxes on the state’s wealthiest residents as part of a plan that would provide relief to the middle class amid a fiscal crisis spawned by the Covid-19 pandemic.
If the plan is signed into law, it could be one of the first in the country to address state revenue shortfalls caused by the ongoing economic crisis by upping collections on the rich. Murphy, a Democrat, said he aimed to have the tax finalized by October.
States across the country have been hit hard by the Covid-19 pandemic, which has forced businesses to close their doors, sending sales tax revenue plummeting. Democratic calls for federal assistance to states have stalled in Congress, with President Donald Trump and other Republicans blaming governors and other local leaders for their budget problems.
Even some Democrats have been wary of raising taxes on the rich to fill the gaps. In neighboring New York, Gov. Andrew Cuomo has rejected similar calls by claiming that they would cause the wealthy to flee.
Murphy, in contrast, said at a press conference announcing the plan that he was simply calling for “pennies on their top dollars earned” that would help “undo years of tax inequities.”
The deal would raise the tax rate on those earning more than $1 million per year to 10.75% from 8.97% while providing a rebate up to $500 to households earning less than $150,000 if they have a child. The income cap for single-parent households would be $75,000. Previously, the 10.75% rate had applied only to those earning more than $5 million.
The rebate checks will go out next summer and are expected to benefit as many as 800,000 families, Murphy said. His administration had previously estimated that the tax increase could bring in $390 million in revenue.
“This is money our families need and money that will help spur our recovery and our future resiliency,” Murphy said.
State Senate president Steve Sweeney and assembly speaker Craig Coughlin, Democrats who had resisted the millionaires tax, said they had come on board with the plan.
“I bet a lot of you didn’t expect to see me here today,” Sweeney said after Murphy spoke.
Sweeney said he had previously had a problem with the timing of the millionaires tax, but a “pandemic hit, and things have changed.”
“Helping middle class families to me makes all the sense in the world at this time,” Sweeney said.
Murphy campaigned for governor on a plan to raise taxes on millionaires and doubled down amid the coronavirus pandemic, which has put a strain on state coffers and left millions out of work. On Thursday, he emphasized that the new tax was not driven by animosity toward the well-off.
“We do not hold any grudge at all against 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,” Murphy said.