By Grover Norquist and Doug Kellogg
New Jersey residents are staring at another series of tax hikes as Governor Phil Murphy tries to work his second budget proposal through the legislature. Murphy’s budget amounts to $38.6 billion, a 3 percent increase in spending from the previous year.
It is incredible, and yet entirely predictable that just one year after imposing over $1 billion in new tax burdens, Murphy is back, demanding more tax hikes.
The biggest cost would come from a so-called millionaire’s tax hike. This would increase New Jersey’s top marginal income tax rate to 10.75 percent, up from 8.97 percent for income over $1 million. This tax would cost taxpayers an estimated $447 million.
For a Governor who is supposedly concerned about higher-earners leaving the state because of the cap on state and local tax deductions (SALT), this is a curious approach. After all, Murphy and the State Attorney General have burned taxpayer resources suing over federal tax reform, almost entirely because of the cap on SALT deductions. Now though, Murphy is pushing a huge tax hike that seems tailor-made to prompt these people to move to Florida.
Senate President Steve Sweeney, who sometimes appears to have one foot in reality has pushed back on the millionaire’s tax idea, saying, “it’s a gimmick”.
Unfortunately, Sweeney has his other foot in fantasy land, and is pushing instead for a tax hike on corporations. This would not help the state economy, only incentivizing more companies to leave New Jersey by making it more difficult for them to compete.
Governor Murphy also turns to an inventive new $21 million tax on opioid pain medication. Murphy’s proposal lacks public details, but it looks to be built off increasing fees on companies that sell and distribute opioid pain medication. These fees are in fact taxes because they would be expressly used to raise revenue for the general fund.
Billed as a way to “help support our fight against the opioid epidemic”, in reality these kinds of taxes punish patients in need of medicine by driving up their costs. In fact, multiplestudies have shown they drive up costs for everyone through higher insurance premiums.
Most tragically, making legitimate pain relievers artificially expensive incentivizes people to use illicit fentanyl. It is illegal fentanyl that is killing people, as the latest CDC data show. So Murphy’s tax on pain is likely to backfire in dangerous ways.
Assemblywoman Nancy Munoz blasted the tax: “this will be a tax on what is a legal drug… I can’t come to terms with how that is morally OK to increase a tax on a legal drug.”
If the continued assault on your wallet wasn’t bad enough. Governor Murphy also wants to tax away your Second Amendment rights.
He’s pushing aggressive fee hikes on firearms. Under current New Jersey law, a firearm permit is $2, a firearm identification card is $2, and a permit to carry a gun is $20. Under Gov. Murphy’s budget proposal, a firearm permit would cost $50, a firearm identification would cost $100, and a permit to carry would cost $400.
This is a likely unconstitutional attack on the rights of low-income residents. It will affect them the most, pricing many of them out of their second amendment right to bear arms.
Murphy’s tone-deaf tax attack will only hurt an already-struggling New Jersey.
As Jersey residents know all too well, the state is already hemorrhaging taxpayers. 2018 saw New Jersey become the No. 1 state to move away from for the year. And it has nothing to do with federal tax reform – which has cut taxes for the vast majority – and everything to do with Trenton making it totally unaffordable to live in the state.
New Jersey remains among the most brutal tax environments in the country ranking 50th for business tax climate, dead last in the nation, while also having the third-most expensive state and local tax burden (according to Tax Foundation).
Someone should remind the Governor that attracting people to the state is one way to grow government revenue. However, New Jersey has seen over $35 billion in adjusted gross income leave the state since 1992. That’s income that Murphy can’t tax no matter how high he raises income tax rates.
Murphy’s weak middle-class property tax relief proposal won’t counteract his other proposals. It is only a $125, one time, payment for those making $10,000 to $250,000 a year. New Jersey will never see meaningful property tax relief without reforms to unfunded mandates, pensions and benefits, and healthcare.
Murphy’s Law states: “Anything that can go wrong will go wrong.” Unfortunately for New Jersey taxpayers, under Murphy, everything can go wrong.
Grover Norquist is President of Americans for Tax Reform (ATR); Doug Kellogg is State Projects Director at ATR.