Gov. Phil Murphy’s budget, which begins on Oct. 1 and lasts through June 30 next year, calls for $860 million in tax increases, part of just over a $1 billion in so-called “revenue raisers.”
A proposed “millionaire’s tax” – twice blocked by the state Legislature – would bring in $390 million by increasing the income tax rate from 8.97 percent to 10.75 percent for any dollar earned above $1 million. Roughly 16,491 New Jerseyans, and 19,129 non-residents, would be affected by the tax hike.
“Building a stronger New Jersey requires us to ask those who, in some cases, continued to prosper as this pandemic raged around us – and most certainly were hurt less – to do more so we can strengthen the middle class families who are the backbone of our state,” Murphy said Tuesday at SHI Stadium at Rutgers University in Piscataway.
“We are asking you to sacrifice pennies on your top dollar to ensure that every New Jerseyan has the same opportunity to succeed that you did.”
Nearly 2,000 residents, and 5,749 non-residents, earning above $5 million already pay the state’s so-called “mega-millionaire’s tax.”
Murphy’s budget calls for increasing the taxes on each pack of cigarettes sold from $2.70 to $4.35, which would bring in $143 million.
When Murphy initially introduced that proposal in February, Senate President Stephen Sweeney, D-3rd District, the top elected official in the state Senate and an oft-times foe of the governor, said he would block it.
Murphy also proposed making the 2.5 percent corporate business surtax permanent – a 2.5 percent surtax for two years on top of the current 9 percent for the state’s highest-earning businesses that was agreed upon by the governor and the Legislature as part of the 2019 budget negotiations – which would bring in $210 million.
Under the current plan, the CBT would drop to 1.5 percent for two years and then phase out entirely. Legislative leaders, like Sweeney, have argued the increase should be made permanent.
An increase in the taxes and fees on firearms and ammunition would bring in $6.3 million, while levying the sales tax on limousine services could bring in $13 million, and removal of a sales tax exemption on boat and yacht sales would bring in $7 million.
“The wealthiest among us – millionaires and large corporations – need to pay their fair share int axes, whether it be on income or in buying a yacht,” Murphy said.
A fee on opioid manufacturers would bring in $15 million for the state. While, a proposed tax hike from 3 percent to 5 percent on certain health insurance premiums – a health maintenance organization assessment – would bring in nearly $103 million.
“This pandemic has also come at a time when we have been combating our ongoing opioid epidemic, and we have not forgotten that effort as we have undertaken fighting this virus,” the governor said.
The budget also calls for levying a 5 percent tax on a deduction created by the 2017 federal tax cuts, known as the qualified business income deduction, for any such income over $1 million.
“This restores a measure of equity following the substantial federal tax cuts instituted in 2017 that disproportinoately benefited higher income earners,” reads Murphy’s full, 53-page “budget in brief” document. “Initially this will raise an estimated $75 million in the spring of FY 2021.”
Editor’s note: This story was updated at 12:27 p.m. EST on Aug. 25, 2020, to include remarks from Gov. Phil Murphy’s budget address, information regarding a fee on opioid manufacturers and a correction to the current cigarette tax, which is $2.70, not $1.65.