The Murphy administration fully unveiled its legislation establishing a millionaire’s tax – a copy of which NJBIZ obtained – even as legislative leadership in the Assembly and Senate have vowed they will not let the proposal move forward.
Under the legislation, which does not have a bill number nor a legislative sponsor, the state would raise the tax rate from 8.97 percent to 10.75 percent for every dollar earned above $1 million. That move is expected to affect roughly 18,000 in-state residents and 19,000 out-of-state residents and generate $536 million for the 2020 fiscal year, which starts July 1.
The bill also enacts the $125 one-time property tax credit that could be used for up to two million New Jersey residents.
Last year, Murphy and the state Legislature agreed to a “mega-millionaire’s tax” which increases the rate to 10.75 percent for every dollar earned above $5 million.
Senate President Stephen Sweeney, D-3rd District and Assembly Speaker Craig Coughlin, D-19th District, both shot down the millionaire’s tax proposal only minutes after Gov. Phil Murphy’s initial budget address in March.
“The reason why we don’t need taxes this year is because the [corporate business tax] exceeded its projections by the administration by almost a billion dollars from what they projected,” Sweeney told reporters following a Senate voting session on Monday.
Meanwhile, Coughlin has whipped up support from lawmakers in his own house who previously came out in support of the millionaire’s tax, pressing them to say they would be fine with a 2020 spending plan that does not include the millionaire’s tax, all of them are Democrats from North Jersey, a region where Murphy has generally gotten the most political support.
Lawmakers have less than a month to approve a spending plan and are eyeing sending Murphy a budget by June 20 next week.
Murphy has suggested that he has not ruled out simply not signing a budget without a millionaire’s tax. And a Politico report from Monday shed light on how several Trenton insiders were nervous that the governor might resort to a line-item veto of Democratic spending priorities.
“Line items could be overridden,” Sweeney responded. “Realize, we’re Democrats. The things we’re talking about are things that Democrats care deeply about, and I would think a progressive Democratic, Democratic governor, would care about those issues.”
The governor’s office declined to comment on the matter of the line-item veto.