The Jersey Tax Spiral Continues

New Governor Phil Murphy follows the Connecticut model.


New Jersey Gov. Phil Murphy speaks at a news conference in Oceanport, N.J., June 14.
New Jersey Gov. Phil Murphy speaks at a news conference in Oceanport, N.J., June 14. PHOTO: NOAH K. MURRAYASSOCIATED PRESS

New Jersey’s Democrats are in a budget standoff between worse and worser, though it’s difficult to tell which proposal is which.

Governor Phil Murphy, who defeated the ghost of Chris Christie in last November’s election, is pushing for a new “millionaires tax,” which would bump the top rate on personal income to 10.75% from 8.97%. He also wants to add nearly half a percentage point to the sales tax, raising it to 7%. New Jersey already has the country’s highest property taxes.

Senate President Stephen Sweeney voted for a “millionaires tax” several times when he knew Mr. Christie would veto it. But now that state and local taxes can no longer be deducted on a federal return, Mr. Sweeney worries Mr. Murphy’s plan would send even more high-earning residents packing for Florida.

Instead he wants to temporarily—yeah, right—raise the state’s top corporate tax rate from 9% to 13%, which would be the highest in the nation. So that way New Jerseyans will stay put, and only their employers will flee?

Neither side is budging despite the Governor’s veto threat. As the Senate was gearing up to pass its proposal Thursday, Mr. Murphy went on a tear: “I got elected to come here and crack the back of this idiocy of kicking the can, phantom numbers, band-aids, toothpicks.” Mr. Sweeney’s reply: “We are the Legislature. And we’re not gonna be dictated.”

Aside from whom to soak, there are other disagreements. The Governor’s budget is $37.4 billion; the legislature’s is a mere $36.5 billion. He wants to spend $50 million on free community college; they would allocate $5 million. He proposes an additional $283 million for schools; they want $348 million. Both sides are ignoring the state’s runaway pension obligations.

No deal by June 30 means New Jersey’s government could shut down. The state has already frozen some spending and ordered agencies to draw up contingency plans. If this sounds familiar, it’s because a shutdown happened last year, too. Say what you will about Mr. Christie—and we have—at least he stopped the Legislature from trying to make New Jersey even less desirable for business than Connecticut.

Now that Democrats have the run of Trenton, the only questions are whose taxes are going up and by how much. Whatever budget agreement Messrs. Murphy and Sweeney may eventually arrive at, it seems likely to cement New Jersey as one of the most taxing places to live and work in America.

Appeared in the June 23, 2018, print edition.

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