(The Center Square) – A budget compromise reached between Gov. Phil Murphy and legislative leaders will give middle income families who meet certain income requirements a $500 tax rebate next year and increases the tax rate on resident making between $1 million to $5 million annually.
Murphy tried twice before to implement the millionaire’s tax, which raises the taxes from 8.97 percent to 10.75 percent on wages over $1 million. The tax is expected to bring in about $390 million.
“I vocally resisted the millionaire’s tax for years, and it wasn’t a political thing about the governor or me,” said Senate President Steve Sweeney. “I had a problem with it at the time, but the pandemic hit and things have changed. We have to face the reality that families are hurting here.”
The tax rebates will be based on 2020 tax returns and go out in the summer of 2021. Couples with at least one child that makes less than $150,000 annually or single parents that make less than $75,000 a year will be eligible. About 800,000 families are expected to be eligible.
Senate Republican Budget Officer Steven Oroho said it will drive residents out of New Jersey.
“Year after year, IRS data shows that New Jersey continues to lose significantly more taxable income from high wage earners leaving the state than it gains from those who are moving in from elsewhere,” Oroho said in a statement. “The Democrats’ tax deal will accelerate that trend, make our State’s finances more unstable, and ultimately drive taxes higher for everyone.”
Assembly Republican Leader Nick Bramnick agreed with Oroho’s assessment.
“Governor Murphy’s plan to raise taxes is a gift for the Florida economy and a nightmare for New Jersey,” Bramnick said. “Passing another ill-conceived tax will make outmigration worse and shift the tax burden onto the middle-class when others leave.”
The tax is just a distraction for other budget items, according to Sen. Declan O’Scanlon.
“When you add in the governor’s payroll tax increases, cigarette tax increases, new taxes on health care plans, and higher fees for hunters and to register motor vehicles, New Jersey families will end up paying more in total under the Democrats’ budget proposal, not less,” O’Scanlon said in a statement. “This is a tax-raising budget any way you look at it.”
Negotiations are continuing on the $32.4 billion budget which needs to be approved before the 2021 fiscal year begins Oct. 1.
Murphy would not comment on negotiations on other items but said, “we’re very close” and indicated the budget would be finalized “well in advance of the Sept. 30 deadline.”