Governor-elect Phil Murphy said Tuesday that a Republican tax overhaul in Congress doesn’t change his plans to raise taxes on millionaires, a week after he seemed to open the door to reconsidering one of his top campaign promises.
Murphy told reporters last week that he supported a millionaires tax “at this moment” and twice said “we’ve got to get Washington settled first” when asked if he was still committed to raising income taxes on the state’s wealthiest residents.
He was less ambiguous on Tuesday. Murphy said the prospect of a GOP tax overhaul that could force New Jerseyans to send more money to the federal government “doesn’t impact my view of what we should do in New Jersey.” He said he was “highly confident” the state would raise marginal tax rates on millionaires after he takes office on Jan. 16.
“I think millionaires are gonna do just fine, unfortunately, in this bill in Washington,” he said after an unrelated transition event in Trenton. “At the end of the day, it doesn’t change my calculus for what we should do in New Jersey.”
Asked about his comments last week, Murphy said he only meant that New Jersey officials need to focus on pushing back against the Republican tax proposals.
Increasing taxes on the wealthy was a major plank of Murphy’s campaign for governor. He has pledged to use the money to pay for a long list of liberal policy promises, including more funding for schools and public worker pensions. The most recent version of the Democrats’ plan would increase the marginal tax rate on income above $1 million from 8.97 percent to 10.75 percent, producing an estimated $600 million to $650 million in revenue.
Senate President Steve Sweeney (D-Gloucester) initially said he’d make a millionaires tax the first bill that passes the state Senate once Murphy is sworn in as governor. But he has recently said the Republican tax overhaul efforts could force Democrats to re-evaluate their plans to raise taxes on millionaires. Sweeney’s office did not return a request for comment on Tuesday.
At issue is President Trump’s push to rewrite the federal tax code. A U.S. Senate bill that cleared a committee Tuesday would eliminate the popular State and Local Tax (SALT) deduction, while a House bill that passed this month would remove the deduction only for state and local income and sales taxes, but cap it at $10,000 for property taxes.
Asked about Sweeney and other Democrats expressing caution over passing a millionaires tax, Murphy said, “People are scared as heck when they look at this bill in Washington. They are literally scared as heck and we all ought to be. So the visceral reaction is ‘holy cow.'”
But New Jersey Policy Perspective, a liberal think tank, said Sweeney’s fears are unfounded. NJPP Vice President Jon Whiten said even with the elimination of the SALT deduction, New Jersey millionaires would still ultimately see a cut in their taxes.
“In fact, the Republican tax proposals in D.C. all favor the wealthy — even if these deductions disappear,” Whiten said in a statement. “Under the new Senate plan, for example, it’s New Jersey families earning under $111,000 who will, on average, pay more in net taxes — not the wealthy. In fact, Garden State families with incomes over $440,000 would get an average annual $2,826 tax cut. The bottom line: New Jersey’s wealthy families aren’t being punished by the GOP tax plans – they’re being rewarded.”
Michael Egenton, executive vice president of government relations for the New Jersey State Chamber of Commerce, said his group agreed with Sweeney’s approach. He said the combination of a millionaires tax, an elimination or reduction of the SALT deduction, and other Murphy priorities like an increase in the minimum wage could cause “sticker shock” for the state’s businesses and wealthiest residents. The chamber opposed the millionaires tax all throughout Gov. Chris Christie’s governorship, even when Congress wasn’t considering a tax overhaul.
“We need to go and proceed with caution and really evaluate and assess what happens at the federal level,” Egenton said. “To double whammy folks that are in that income bracket, on top of what could be done in the federal tax proposal, could be devastating.”