Gov. Phil Murphy Announces Deal On NJ Millionaire's Tax, Rebates
NEW JERSEY – Gov. Phil Murphy announced on Thursday that New Jersey has reached a deal on passing a millionaire's tax as well as rebates for homeowners (you can watch it here, below).
The deal with take effect on Oct. 1.
Murphy said the coronavirus crisis has had a staggering impact on New Jersey's economy and the state's middle class "needed an extra push" since many people have lost their jobs.
The additional revenue will help provide middle-class tax relief and more money for schools, the governor said..
"Now is the time that the wealthiest among us are also called to sacrifice," Murphy said.
Senate President Steve Sweeney, who has long resisted a millionaire's tax, said his opposition wasn't political, but circumstances have changed since the outbreak began in March.
"The pandemic hit and things have changed and we have to face the reality that a lot of families are hurting here," Sweeney said.
The millionaires tax will mean this: a 10.75 percent marginal tax rate currently imposed on income over $5 million will be imposed starting at $1 million in taxable income. This proposal is expected to raise $390 million in FY 2021, officials said.
The deal includes a $500 rebate to families with at least one dependent child whose households earn less than $150,000 per year. The rebate will apply to families with a single parent earning $75,000 or less.
The rebate checks will be based on tax filings next April, so Murphy said he expects New Jersey homeowners will get them during the summer of 2021.
No deal has been made yet on the final budget, but Murphy said raising the sales tax "will not be a part of" any discussion. He also said he's "very close" to an agreement that would possibly raise the tax on corporate income in New Jersey. Read more: Gov. Murphy: More Taxes, Funds Needed In NJ Budget Amid COVID-19
New Jersey made the announcement while also revealing that New Jersey had one of its biggest daily numbers of new coronavirus cases in weeks: 617. Three more people also died. Read more: NJ Coronavirus, School Reopen Updates: Here's What You Need To Know
Murphy made the announcement weeks after announcing that he's also revised state aid figures for schools amid the coronavirus crisis. Read more: Gov. Murphy Releases New NJ State Aid Figures For Schools
Sweeney and many Republicans have long opposed a millionaire's tax because they feared it would drive more business and industry out of the state.
Governor Murphy’s plan to raise taxes is a gift for the Florida economy and a nightmare for New Jersey. News reports indicate the democrats in the legislature will support this ill conceived proposal.
— Jon Bramnick (@JonBramnick) September 17, 2020
New Jersey Business and Industry Association President and CEO Michele Siekerka criticized the plan, saying the millionaire's tax "is a gimmick that further verifies what we have said all along – increased taxes were always completely unnecessary as part of the FY2021 budget that already includes billions in bonding."
“We note that the relief tied to this tax increase is undermined by other non-budget hikes for tolls and gas and other proposed taxes in the budget," they said. "Our taxpayers need real tax reform that includes property tax relief, while this does not really improve our overall affordability crisis or remove us from the edge of our fiscal cliff."
Murphy has said decreased revenue collections left the state facing a $5.7 billion shortfall over what was projected during the governor’s budget message in February.
The governor also is proposing tax policy changes over a nine-month fiscal year period. The tax policy proposals total $1.019 billion, including $863.1 million in increased revenues and $155.6 million in reduced appropriations for that period.
The proposed tax changes are:
Increase the cigarette tax to $4.35 per pack: This tax would yield an estimated $143.1 million for eight months of FY 2021. New Jersey’s tax rate would match that of neighboring New York and Connecticut, but would be below the combined state and municipal rate in New York City, officials said.
Firearms and ammunition taxes and fees: The governor has proposed raising firearm fees, many of which have not been updated since 1966, and implementing excise taxes on firearms and ammunition, The hikes are estimated to raise $6.3 million over an eight month period in FY 2021, officials said.
Increase HMO assessment to 5.0 percent: This proposal would increase the current annual assessment on net written premiums of HMOs from 3 to 5 percent and raise an estimated $102.7 million in FY 2021.
State health insurer assessment: The governor signed legislation in July to create the New Jersey Health Insurer Assessment, which sets the rate at 2.5 percent of net written premiums and will support the state’s reinsurance program and state-level subsidies in FY 2021.
Opioid assessment: This proposal would raise an estimated $15 million in FY 2021 by increasing registration fees and penalties and levying new assessments on opioid drug manufacturers and wholesalers, officials said.
Restore sales and use tax on limousine services: Currently, these services are not subject to New Jersey sales tax. This proposal would raise an estimated $13 million over eight months of FY 2021.
Undo the exemption and cap on sales and use tax for new and used boats: Currently, boat sales are provided a 50 percent sales tax exemption and the total tax is capped at $20,000 per sale. The restoration of the full sales tax and elimination of the cap would yield an estimated $7.0 million over eight months of FY 2021.
Watch Murphy here:
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This article originally appeared on the Princeton Patch
