SPONSORED:

NJ leaders reach deal for millionaires' tax to grapple with pandemic costs

NJ leaders reach deal for millionaires' tax to grapple with pandemic costs
© Getty Images

New Jersey leaders announced Thursday they are implementing a new millionaire’s tax as the Garden State works to recover from the economic fallout of the coronavirus pandemic.

Gov. Phil Murphy (D) was joined by state leaders at a press conference in Trenton to announce that lawmakers have agreed to raise the tax rate on residents earning over $1 million from 8.97 percent to 10.75 percent. The agreement also includes a maximum $500 tax rebate for middle-class and low-income working families with at least one dependent child for single parent households earning $75,000 or married couples making under $150,000.

The rebate checks will start to go out in summer 2021. Murphy said the effort will help as many as 800,000 families in New Jersey. People in the state earning over $5 million are already taxed at the higher rate.

ADVERTISEMENT

“We do not hold any grudge at all against those who have been successful in life, but in this unprecedented time when so many middle-class families and others have sacrificed so much, now is the time to ensure that the wealthiest among us are also called to sacrifice. And literally, by the way, pennies on their top dollars earned is a modest ask,” said Murphy, adding that the boosted revenue could go to “our schools, our communities and our property taxpayers.”

“The principle that we coalesced around was simple. As we look to the other side of this pandemic, we will need to fuel an economic recovery. Many of our middle-class and working families were laid low with the steps we have had to take — painful steps, I might add — to protect families and save lives from the pandemic meant that they couldn’t go to work. Now we’re going to help by giving them back some of what they lost.” 

The millionaire’s tax marks a victory for liberals in New Jersey who had pushed for years to have it included in the state budget though were never able to succeed under former Republican Gov. Chris Christie.

Murphy, a self-avowed progressive, had been working since he took office in 2018 to gin up support for the initiative from state Senate President Stephen Sweeney and General Assembly Speaker Craig Coughlin, both Democrats who were initially cool to the idea.

But the coronavirus rejiggered the political calculus in Trenton, with Murphy’s handling of the pandemic helping fuel a surge in his approval ratings into the 70s and pushing lawmakers initially reluctant to the tax to the negotiating table.

ADVERTISEMENT

“I bet a lot of yous didn’t expect to find me here today. And you know, I’m surprised, I am,” Sweeney joked to reporters. “We resisted, and I vocally resisted, the millionaire’s tax for years. And it wasn’t a political thing about the governor or me, it was, I had a problem with it at the time. But the pandemic hit, and things have changed, and we have to face the reality that a lot of families are hurting here.” 

“Until he came to me, I wasn’t really there. But helping middle-class families to me makes all the sense in the world at this time,” he added, crediting Coughlin with convincing him of the necessity of the tax.

The millionaire’s tax is just one part of a nine-month, $32.4 billion budget that Trenton must adopt by Oct. 1. It also includes about $1.2 billion in spending cuts.

The news faced swift pushback from state Republicans, who have panned past efforts to implement the millionaire’s tax.

“Blink and you’ll miss the next Trenton tax hike,” said Doug Steinhardt, chairman of the New Jersey Republican Party. “At a time when Trenton should practice restraint and find creative ways to spend less so you can save more, they don’t, can’t and won’t. NJGOP will continue the fight for leadership that will have the government give back to the people when times are tough, not ask even more of our overburdened citizens.”