Governor-elect Phil Murphy said Monday that he still supports raising taxes on millionaires “at this moment,” even as the state’s top lawmaker, Senate President Steve Sweeney, says he is concerned the Republican tax overhaul in Congress could complicate Murphy’s plan.
After speaking in favor of a minimum wage hike in a state house news conference, Murphy was asked about Sweeney’s comments. The governor-elect twice told reporters, “We’ve got to get Washington settled first,” suggesting that he shared Sweeney’s concerns.
Asked whether he was still committed to raising the millionaires tax in New Jersey regardless of what happened in Congress, Murphy said, “The answer is we’ve got to get Washington settled first, but the answer is yes.”
A reporter followed up, asking, “You’ll reconsider the millionaires tax?”
“No, I’m saying we’ve got to get Washington settled first,” Murphy replied.
After another follow up — “Will you reconsider it?” — Murphy said, “At this moment, no.”
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.
Sweeney (D-Gloucester) said after the Nov. 7 election that the millionaires tax would be a top priority for the state Senate when it reconvened next year. But last week, Sweeney said the GOP tax overhaul in Congress could affect those plans.
A House bill backed by President Trump that passed last week would cap the popular State and Local Tax (SALT) deduction at $10,000. High-tax states such as California, New Jersey, New York and Virginia would be particularly hard-hit by the move. Taxpayers in the state could end up sending $137 million more to the federal government in taxes over the next decade, according to a report from the Institute of Taxation and Economic Policy.
“It’s problematic if this goes through,” Sweeney said of the Republican plan on Monday. “The middle class is supposed to get a tax hike. Everyone in this state is supposed to get a tax hike. Property values are going to drop 20 percent. So we can’t ignore it.”
Sweeney estimated that an increased income tax on the rich could generate $650 million a year, which would go toward increased state aid for underfunded school districts. Pulling the plug on the millionaires tax means Murphy and Democrats would have to scrap their plans to increase funding for public schools or public workers’ pensions — or find another source of revenue to tap.
“That was a curve ball from Washington that we really didn’t expect to happen,” Sweeney said. “Now we’ve got to look at everything, because we need to fund our schools, too. We need to fund our pensions. We’ve got a lot of funding to do.”
Murphy blasted the GOP tax plan Thursday during a speech at a League of Municipalities annual conference and during an interview with News 12 New Jersey that aired over the weekend, in which he criticized Rep. Tom MacArthur (R-3) for being the only New Jersey member of Congress to vote for the GOP tax bill.
MacArthur defended his vote in a letter to Murphy on Monday and swiped at the newly-elected governor for trying to raise some taxes. He invited Murphy to meet with him to discuss their plans.
“I understand that state legislative leaders in New Jersey are already reconsidering their plans to raise taxes, which would be a welcome new direction for Trenton,” MacArthur wrote. “Let’s put the talking points aside and have a conversation about your plan to raise taxes in N.J. and my efforts for real tax reform in Washington, D.C. ”
That state-level Democrats would reconsider raising taxes is an “excellent” side effect of the GOP tax overhaul, the Wall Street Journal editorial board wrote Monday. “Making politicians in Trenton, Albany, Sacramento and Springfield nervous about raising taxes is one desirable outcome of tax reform,” the editorial said.