Phil Murphy really didn’t say much in his budget address today that he didn’t talk about during his campaign for governor.
He talked about fully funding schools, raising the minimum wage to $15 per hour, making greater pension contributions, legalizing marijuana and increasing the income tax for those earning more than a million dollars a year.
There was one new item, a proposal to increase the sales tax back to 7 percent, which it had been for years.
The sales tax now stands at an incredibly complex number – 6.625 percent. Try figuring out the tax when you make a purchase of, say, $78.
The tax was decreased to that odd level as part of the deal engineered by former Gov. Chris Christie and Democratic leaders that raised the gas tax and refurbished the state’s transportation trust fund.
Murphy was certainly correct when he said most people in the state won’t notice the increase. In fact, I would not be surprised if many people in New Jersey don’t know, or don’t realize, that the sales tax was reduced in the first place.
Politics, however, is often more about perception than it is reality. And the reality, as Republicans will be delighted to point out, is that the Democratic governor now wants to raise a tax that he never said he wanted to raise in the campaign.
Increasing the income tax on millionaires will also draw GOP condemnation, but Murphy has some cover on that one. This was something he talked about in the campaign and he won election easily.
Still, the governor took pains to stress that he is not proposing increasing taxes on those making $50,000 a year, or $75,000 a year. or for that matter, an even $1 million a year.
The explanation is needed, because as we have seen in New Jersey politics, simple arithmetic is not always that simple. Years ago, Democrats proposed a so-called millionaire’s tax that would have kicked in at $500,000.
Clearly, Murphy wants to avoid proposing a similar scheme. His plan would start with income greater than $1 million. Those individuals are now taxed at 8.97 percent; Murphy wants to raise that to 10.75 percent.
Republicans will say, as they already are, that the move would “drive people out of the state.”
Obviously, it may induce some high-earners to leave, but certainly not all of them or even many of them.
As Murphy ironically noted – either by design or coincidence – people don’t live in New Jersey because taxes are low. His point is that there are many reasons why people, millionaires included, live in New Jersey. It could be where their jobs and businesses are. It could be because of the state’s location in the New York Metropolitan Area. It could be because they like the schools their kids attend, or just family tradition. To suggest a majority of these individuals are going to relocate because of, relatively speaking, a small increase in their income taxes, is not reality.
Murphy needs revenue from the higher sales tax, millionaire’s tax and legalized pot taxes to fulfill most of his rather ambitious agenda.
Again, this was nothing that he hasn’t said before.
The governor wants more state aid to public education, which can theoretically lower property taxes. Also on his agenda is pre-K education throughout the state and more aid to community colleges with the eventual goal of making them tuition-free.
He proposed virtually tripling state support for NJTransit, which he said had been decimated during the Christie years. And he pledged that better times are coming for the thousands of New Jerseyans who rely on state buses and trains.
The governor also reviewed what he has done already, and what he envisions to do, in regard to women’s health, equal pay for equal work, paid sick leave and a revamped tax incentive program for businesses.
These ideas are bound to have ample public support. The question is whether the public – and a majority of lawmakers – will embrace Murphy’s plans to pay for them. Let’s keep in mind that Senate President Stephen Sweeney is not as philosophically liberal as Murphy is. Republicans undoubtedly will yell and scream, but it’s Democratic support that the governor needs. Let’s see if he gets it.
Murphy so far has avoided detailed plans on reducing property taxes, which are the most burdensome tax in the state for most. In what almost seemed like a throwaway line, he said he planned to appoint a shared-services czar. One wishes the governor had more to say about that.
One thing should be obvious. It won’t be easy to convince local officials infatuated with home rule to give up some of their power and influence to save tax money.
Someone with czar-like authority may be just what we need.