A New Jersey millionaire’s tax boost that Republican Governor Chris Christie vetoed five times will be Democrats’ top priority with their party newly in control of the executive branch, said the highest-ranking state lawmaker.
Governor-elect Phil Murphy, the Goldman Sachs Group Inc. multimillionaire who defeated Christie’s lieutenant, Kim Guadagno, on Tuesday has vowed to enact the increase. With that revenue, plus higher corporate taxes and fees from plans to legalize marijuana sales, the strapped state budget will gain $1.3 billion, Murphy has said.
Senate President Steve Sweeney, a Democrat from West Deptford whose party had championed the tax on high earners for almost eight years, only to meet Christie’s veto pen, revived the matter in a tweet on Wednesday. Democrats control both houses of New Jersey’s legislature.
“The first bill we pass in January with our new governor will be a long-overdue millionaires tax to fairly and fully fund our schools,” Sweeney wrote. In an interview, he said the bill would lead to property-tax relief, with more state revenue covering local education costs, a prime driver of homeowner bills.
“After eight years, it will go right through this time around,” Sweeney said. The rate change for high earners would be immediate, he said.
Wealthiest Residents
The top 1 percent of earners — about 17,000 residents — provide about 40 percent of the state’s income-tax revenue, according to the New Jersey taxation division. The provision vetoed by Christie would have increased the tax rate on income above $1 million from 8.97 percent to 10.75 percent. That would raise as much as $615 million in annual revenue, according to the state office of legislative services.
If the increase were passed, high earners might face a second dose of pain from Washington: The tax bill under consideration in the U.S. House would eliminate an existing provision that allows for deducting state tax payments from federal taxes.
Murphy beat Guadagno by 13 percentage points on Tuesday amid discontent with Christie, the least popular U.S. governor in more than 20 years of Quinnipiac University polling. Murphy, 60, promised to fulfill two failed Christie promises — to reduce the nation’s highest property taxes and make full payments to the least-funded U.S. pension system — and to bolster the middle class with more spending on education and health care.
New Jersey in recent years has led U.S. states for the number of residents leaving for lower-cost places to live. Among them were Omega Advisors Inc. chairman Leon Cooperman and Appaloosa Management LP founder David Tepper, billionaires who moved to Florida. Christie also has cited the state’s high taxes and business regulations as a reason for its slow recovery from the national recession.
“I’m not worried about that,” Sweeney said of wealthy residents leaving. Come Jan. 1, a repeal of the estate tax will go into effect, an enticement for them to stay, he said.
This article was provided by Bloomberg News.
