New Jersey Governor Phil Murphy has ambitious spending plans for his first year in office. Legislators have their own budget plans. Once they settle their differences, however, it appears that taxes will be going up in the Garden State.
The newly-elected Democratic governor’s budget proposes spending $37.4 billion in the next fiscal year, an increase of 8% over the current fiscal year’s level. A major area where this new spending would be allocated is for the state’s pension system. Currently underfunded, Gov. Murphy wants to put $3.2 billion towards shoring it up. There would also be an additional $284 million for K-12 education spending, $57 million for preschool, $50 million for subsidies for community college students, and $167 for the state’s transit agency.
Paying for this new spending would come from a variety of tax hikes:
- An income tax of 10.75% on those making $1 million or more, retroactive to January 1
- A sales tax increase from 6.625% to 7%
- New taxes on users of Uber, Lyft, Airbnb and similar services
Gov. Murphy will also push to legalize, and then tax, recreational marijuana.
Even though Democrats control the legislature, it is unclear if how this tax plan will fare. Senate President Steve Sweeney favors increasing income taxes on corporations making over $1 million a year. He has been cool to the idea of a “millionaire’s tax,” such as the one proposed by the governor.
Under New Jersey’s constitution, legislators can either use the governor’s budget plan or develop one of their own. Given the disagreement on taxes, this may be the option that legislators exercise this year.
Regardless of these differences, both the governor and legislators support higher spending. With the disagreement centered on what taxes to increase, not on whether to increase taxes at all, it appears certain that New Jersey taxpayers will be paying more soon.
Do you support higher taxes in New Jersey? Is it a good idea to legalize and tax recreational marijuana as suggested by Gov. Murphy?