Pushing For An Expanded “Millionaire’s Tax”
Governor Phil Murphy presented his proposed $38.5 billion budget for the 2019-2020 fiscal year to the State Legislature on March 5th, calling for a $1.2 billion increase in spending from last year. The increase in spending relies on increasing the millionaire’s tax and reducing some state costs.
The Governor is pushing to extend the state’s top 10.75% tax bracket to New Jersey residents earning more than $1 million a year. The top tax rate currently applies to those making more than $5 million. If approved, it is estimated to impact 18,000 New Jersey residents and would raise nearly $450 million in additional revenue for the State. But the Governor faces universal opposition from Republican legislators and several Democrats, including Senate President Steve Sweeney and Assembly Speaker Craig Coughlin, who have voiced their opposition to raising taxes.
Governor Murphy also claimed that his budget proposal includes $1.1 billion in savings, highlighted by approximately $800 million in savings from changes to public employee health care benefits, a 16% reduction from the current fiscal year. Another $200-300 million in savings is expected to be realized through cost reductions in various State departments.
Both Senate President Sweeney and Assembly Speaker Coughlin have stated they feel the State can achieve even more substantial savings through reforms. As budget negotiations proceed ahead of the June 30th deadline, we are likely to hear calls for cost savings repeatedly voiced as a counter-proposal to Governor Murphy’s push for an increase in the “millionaire’s tax.”
During his speech, Governor Murphy stated that corporate business tax revenue is expected to surpass projections and, if approved as proposed, his budget would allow the State to end the fiscal year with a $1.1 billion surplus. A healthy State surplus serves as protection against an unanticipated economic downturn.
NJ CAR will continue following the budget negotiations and report on any issues that impact the Coalition’s dealer members.