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Deal Reached in N.J. for ‘Millionaires Tax’ to Address Fiscal Crisis

2020-09-17 13:37:21
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Gov. Philip D. Murphy campaigned on a vow to raise taxes on the rich in New Jersey.

It took three years and a pandemic to get it done.

Mr. Murphy, a Democrat, was expected to announce on Thursday morning a deal that includes a higher tax rate for residents earning more than $1 million a year, three people with knowledge of the negotiations said.

The agreement also includes a recurring $500 rebate for families with at least one child and an annual income of less than $150,000 a year for couples and $75,000 for single parents.

The move, which has been panned by Republicans and some business leaders as a risky step that could lead to an exodus of the state’s wealthiest residents, comes amid a growing national debate over whether to increase taxes on the rich to help address a widening income gap.

The agreement is also a tacit acknowledgment of Mr. Murphy’s approval ratings, which jumped to 71 percent in a recent poll by Monmouth University.

Both Mr. Coughlin and Mr. Sweeney are expected to join the governor at 10 a.m. to announce the deal.

In neighboring New York, Gov. Andrew M. Cuomo, a fiscal moderate, has largely resisted proposals to raise billions by taxing the wealthy. Mr. Cuomo has consistently called on the federal government to bail out the state, which he is says needs some $59 billion to cover two years of projected state deficits.

Progressives in Albany have been pushing the governor to consider a variety of bills, including one to raise the tax rate on those earning more than $100 million to almost 12 percent.

New Jersey’s millionaires tax is expected to generate an estimated $390 million this fiscal year. The $500 rebate, a compromise put forth by Mr. Coughlin, is expected to cost about $340 million a year, according to people who spoke on condition of anonymity because they were not authorized to speak publicly before the 10 a.m. announcement.

The millionaires tax is part of a nine-month, $32.4 billion spending plan that must be adopted by Oct. 1. The proposed budget Mr. Murphy released last month also includes about $1.2 billion in spending cuts and $4 billion in new bonding debt.

The deal, first reported on Wednesday by the New Jersey Globe, was immediately criticized by the state Republican Party.

“Blink and you’ll miss the next Trenton tax hike,” the state’s Republican chairman, Doug Steinhardt, said in a statement. “That’s how fast Phil Murphy and his Democrats are spending your money.”

Jesse McKinley contributed reporting.

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